Grant of Margin Money for Availing Capital Loan under the Development of Coir Scheme, Puducherry

What is the Grant of Margin Money for Availing Capital Loan?

Grant of Margin Money for Availing Capital Loan is a component of the Development of Coir scheme, run by the District Industries Centre under the Department of Industries and Commerce, Union Territory of Puducherry.

The stated objective of the component is to encourage the entrepreneur to set up new coir industries or renewal of existing coir industries. The instrument used is margin money. The promoter's own contribution that a bank insists on before it releases a term loan. For a first-generation coir entrepreneur, that own contribution is usually the barrier: the project may be viable and the bank may be willing, but the promoter cannot put up the margin. This component puts it up instead.

According to the District Industries Centre, on receipt of the sanction order of the financial institution, 25 per cent margin money restricted to Rs 25,00,000, that is, for a project of Rs 1,00,00,000 to on the loan amount will be released to the bank on behalf of the entrepreneur.

Coir work in Puducherry is a village-level activity built around coconut husk fibre, and the units this component supports are typically small mechanised workshops making coir rope, coir mats and allied products.

How much is given and how is it released?

Two features of the release matter in practice.

It is released to the bank, not to you. The grant reduces what the promoter has to find, but it never passes through the promoter's hands.

It is triggered by the bank's sanction. The Centre acts on receipt of the sanction order, which means the sequence is: prepare the project, obtain the bank's loan sanction, then apply for margin money, not the other way around.

Who is eligible for the margin money grant?

You can apply if:

• The unit is set up in the Union Territory of Puducherry. This is the first condition the District Industries Centre states.
• You are setting up a new coir industry or renewing an existing coir industry.
• You can produce the sanction letter in respect of a loan sanctioned by a financial institution.
• You can start commercial production within six months from the date of release of the margin money grant.
• You are willing to submit an undertaking letter assuring that you will run the unit successfully for five years after its establishment.

You are not eligible, and cannot apply, if:

• Your unit is located outside Puducherry, even if you personally live in the Union Territory.
• You have no loan sanction. A loan application in progress, or an in-principle indication, is not a sanction letter.
• You are not in the coir line of business. This component belongs to the Development of Coir scheme, and a general manufacturing unit should look instead at the Industries and Commerce Department's capital investment subsidy and interest subsidy.
• You cannot commit to commencing production within six months of the grant release, or to running the unit for five years.
• You are an individual seeking a personal cash grant with no unit and no bank loan. There is no personal benefit under this component; an individual who wants to enter the trade should start with the Centre's coir training, which carries a stipend.

What documents are required?

How to apply for the margin money grant

1. Prepare the coir project report: machinery, shed, raw material sourcing, production plan and project cost, and take it to a financial institution. The loan comes before the grant.
2. Obtain the loan sanction letter from the bank or financial institution. The District Industries Centre acts on the sanction order, so this document is the centrepiece of the application.
3. Take a print of the prescribed application form from the Centre's application forms area at dic.py.gov.in/application-forms-download-area, or collect a hard copy at the Centre.
4. Fill in all the mandatory fields, paste the passport-size photograph and sign across it, and attach self-attested copies of the sanction letter, project report, premises proof, identity and residence proof, and the undertaking letter assuring that the unit will be run successfully for five years.
5. Visit the District Industries Centre at Industrial Estate, Thattanchavady, Puducherry 605009 on a working day during office hours, and submit the duly filled and signed application with the documents to the concerned authority. Applicants from Karaikal can approach the Functional Manager at the Rural Industrial Estate, Kottucherry, Karaikal 609609.
6. Collect your unique number. On receipt, the Centre makes entries in the application receipt register and assigns a unique number, which identifies you in all further references and serves as the acknowledgement.
7. Start commercial production within six months of the release of the grant, and keep the production records — the six-month condition is enforceable.

How do I check my application status?

1. Quote the unique number given at the time of submission.
2. Contact the District Industries Centre on +91-413-2248391, 2248987 or 2249392, or the Karaikal office on +91-4368-266467.
3. Follow dic.py.gov.in, which carries the Development of Coir pages and the Centre's notice board.

Common reasons applications fail

• No sanction letter from the financial institution.
• Unit located outside the Union Territory of Puducherry.
• Undertaking letter not filed for running the unit five years.
• Production not commenced within six months of release, which puts the grant at risk of recovery.
• Project cost inflated beyond what the bank sanctioned, since the margin money is 25 per cent of the loan amount with a Rs 25,00,000 cap.
• Incomplete premises documentation for the coir unit.

What else the Development of Coir scheme offers

The margin money component sits inside a wider coir programme run by the District Industries Centre. The scheme also provides training in coir rope and coir mat making, advanced and high skill training in coir, and exposure tours for coir artisans, and departmental records describe a raw material procurement subsidy of 15 per cent of annual procurement, subject to a maximum of Rs 5,00,000 per annum per unit. Training notifications for the Puducherry and Karaikal regions are published on dic.py.gov.in as batches are sanctioned.

A coir entrepreneur in Puducherry may separately be eligible for central schemes of the Coir Board, including the Coir Udyami Yojana credit-linked subsidy and the Mahila Coir Yojana, which are applied for through the Coir Board rather than the District Industries Centre.

Help and contact

• District Industries Centre, Industrial Estate, Thattanchavady, Puducherry 605009 to +91-413-2248987, 2248391, 2249392
• Karaikal; Functional Manager, Rural Industrial Estate, Kottucherry, Karaikal 609609 to +91-4368-266467
• Scheme page: dic.py.gov.in/grant-margin-money-availing-capital-loan
• Grievance redressal, industry.py.gov.in/grievance-redressal-mechanism