Grant of Margin Money for Availing the Capital Loan — Component of the Development of Silk Scheme

What is the Grant of Margin Money for silk weaving units in Puducherry?

Grant of Margin Money for Availing the Capital Loan is a component of the Development of Silk scheme run by the District Industries Centre under the Department of Industries and Commerce, Union Territory of Puducherry. The District Industries Centre states the objective simply: to encourage entrepreneurs to set up new silk weaving industries or to renew existing units.

The obstacle the component removes is a familiar one. A bank sanctions a term loan or working capital loan for a silk weaving unit, but expects the promoter to bring a margin contribution of their own before disbursement. A weaver with the skill and the order book but no savings stalls at exactly that point. Under this component the District Industries Centre pays 25% of the loan amount, restricted to Rs 50,000, straight to the bank as the promoter's margin money.

Because the grant is paid to the lender rather than to the applicant, it does not reach the promoter as cash. It unlocks the loan.

Who is eligible for the silk margin money grant?

Promoters who can apply:

• A person who belongs to the Union Territory of Puducherry by virtue of birth, or by continuous residence for five years.
• A promoter who has ascertained the availability of a loan and can produce the loan sanction letter from the financial institution.
• A promoter setting up a silk weaving unit located in the Union Territory of Puducherry.
• A promoter whose income, together with that of family members, from all sources is below Rs 1,00,000.

Commitments the promoter must accept:

• The unit must start commercial production within six months from the date of release of the margin money grant.
• The promoter must produce an undertaking that the unit will be run successfully for five years after establishment.

Who is not eligible:

• Registered societies and agencies, which are not eligible under this component. Their route is the Grant to Silk Societies/Agency component of the same Development of Silk scheme, worth Rs 2,00,000 a year for five years.
• Applicants from outside Puducherry, or those who cannot show birth in the Union Territory or five years of continuous residence.
• Applicants whose family income from all sources is Rs 1,00,000 or more.
• Applicants with no loan sanction, since the grant is calculated as a percentage of a sanctioned loan and paid to the lender.
• Units proposed to be located outside the Union Territory of Puducherry.
• Applicants who cannot commit to production within six months or to running the unit for five years.

How much is the grant?

On a loan of Rs 2,00,000, the 25% works out to Rs 50,000 and the ceiling is reached exactly. Above that loan size, the grant stays at Rs 50,000, so the promoter must arrange the balance margin from other sources.

What documents are required?

How to apply for the silk margin money grant

1. Arrange the loan first. Approach a bank or financial institution for a term loan or working capital loan for the silk weaving unit and obtain the sanction order, since the grant is calculated on the sanctioned amount and released against it.
2. Print the prescribed application form from the application forms download area at dic.py.gov.in/application-forms-download-area.
3. Fill in all mandatory fields, paste the passport-sized photograph (signed across), and attach self-attested copies of the loan sanction letter, residence proof, income certificate, project report and the five-year undertaking.
4. 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 enclosures to the concerned authority.
5. Collect the acknowledgement. The office enters the application in the receipt register and assigns a unique number that identifies the applicant in all further correspondence.

Applicants in Karaikal can submit to the Functional Manager, District Industries Centre, Rural Industrial Estate, Kottucherry, Karaikal 609609, on +91-4368-266467.

What happens after the grant is released?

Once the District Industries Centre releases the margin money to the bank, two conditions become live and are checked:

• Six months to commercial production. The silk weaving unit must start producing within six months of release. Keep dated evidence, the first purchase of yarn, the first production register entry, the first sale invoice.
• Five years of operation. The undertaking the promoter signs commits to running the unit successfully for five years after establishment. Closing the unit early puts the grant at risk of recovery.

How to check your application status

1. Quote the unique application number from the acknowledgement.
2. Contact the General Manager, District Industries Centre, Thattanchavady, on +91-413-2248391, 2248987 or 2249392, or email dic[dot]pon[at]nic[dot]in.
3. Ask the bank branch separately whether the margin money has been credited to the loan account, because the grant reaches the lender before the promoter sees any effect on disbursement.

Common reasons margin money applications are rejected

• No loan sanction letter. The scheme cannot compute 25% of an amount that has not been sanctioned.
• Family income at or above Rs 1,00,000 from all sources.
• Residence not established — neither birth in Puducherry nor five years of continuous residence proved.
• The proposed unit is outside the Union Territory.
• No undertaking on running the unit for five years.
• A society or agency applies under a component meant for individual entrepreneurs.
• Production not started within six months of release, which affects the released grant rather than the application.

Grievance redressal

The District Industries Centre's Citizen's Charter, published at dic.py.gov.in, sets out its service standards. Grievances go through the Industries and Commerce Department's grievance redressal mechanism at industry.py.gov.in/grievance-redressal-mechanism, and can be escalated to the Director of Industries and Commerce, Thattanchavady, on +91-413-2248476, and then to the Secretary to Government (Industries and Commerce), Chief Secretariat, Puducherry 605001, on +91-413-2336115.

The application form is a free download. No agent or middleman needs to be paid to get a margin money application registered at the District Industries Centre.