Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

What is SFURTI?

Scheme of Fund for Regeneration of Traditional Industries (SFURTI) is a scheme of the ARI Division of the Ministry of Micro, Small and Medium Enterprises that organises traditional industries and artisans into clusters and funds the shared facilities those clusters need. The revised guidelines currently in force were circulated to all Nodal Agencies on 5 March 2020.

SFURTI's stated objectives are to make traditional industry clusters competitive, to provide sustained employment to traditional artisans and rural entrepreneurs, to equip artisans with improved skills, and to build shared infrastructure and equipment so that facilities are used to their full capacity.

How SFURTI is organised

• The Ministry of MSME provides policy, coordination and funds, and the Scheme Steering Committee (SSC) approves each cluster project.
• Nodal Agencies (NAs); national institutions with sectoral expertise, receive funds and release them to clusters. KVIC is the Nodal Agency for khadi and village industry clusters and the Coir Board for coir clusters; the list also includes NI-MSME Hyderabad, IIE Guwahati, NIESBUD Noida, IEDO Bhubaneswar, the J&K KVIB, several foundations, and central tool rooms and training institutes.
• Technical Agencies (TAs) provide technical handholding and help draw up the marketing strategy.
• Implementing Agencies (IAs) run the cluster on the ground and employ a Cluster Development Executive.
• A Special Purpose Vehicle (SPV) is formed for every cluster to sustain it after the project period ends.

Who is eligible for SFURTI?

Who can bring a proposal

• Implementing Agencies: non-government organisations, institutions of the Central and State Governments, semi-government institutions, field functionaries of state and central government, and Panchayati Raj institutions with suitable cluster development expertise.
• Corporates and CSR foundations with cluster development expertise, and corporate entities forming cluster-specific SPVs. Where a private sector entity is the Implementing Agency, it must contribute at least 50% of total project cost excluding land.
• Normally one Implementing Agency handles one cluster, unless it is an agency with state-wide coverage and the Nodal Agency is satisfied it can handle more.

Cluster conditions

• Regular clusters cover up to 500 artisans; major clusters cover more than 500.
• Clusters with fewer artisans may be proposed by a Nodal Agency, but the number should not be less than 100 artisans; or 50 in the North Eastern Region and hilly areas, with proportionate grant-in-aid decided by the SSC.
• The SPV must be a registered society, co-operative society, producer company, Section 8 company, trust or another legal entity approved by the SSC, with at least 33% artisan representation in its governing body. Khadi Institutions of KVIC acting as IA are treated as deemed SPVs.
• In a private-sector-promoted SPV, the lead investor's shareholding should normally not exceed 50% of total equity.

Who cannot apply

• An individual artisan cannot apply for a personal SFURTI grant. There is no citizen application form.
• A single enterprise or self-help group acting alone, outside a cluster proposal, is not eligible.
• Land purchase is not eligible for funding under any head.
• A project cannot draw duplicate funding for the same component from another source, though other funds may be dovetailed where there is no duplication.

What documents are required for SFURTI?

How to apply for SFURTI

1. Identify the traditional industry cluster and the artisans in it, and confirm that the numbers meet the scheme thresholds to 100 artisans minimum, or 50 in the North Eastern Region and hilly areas.
2. Approach a Nodal Agency listed under the scheme, such as KVIC for khadi and village industry clusters or the Coir Board for coir. Proposals for setting up a cluster are submitted online to a Nodal Agency; until the online system is active, proposals may be sent in physical form.
3. Work with an empanelled Technical Agency to prepare the Detailed Project Report, setting out soft, hard and thematic interventions, the marketing strategy, and an exit strategy with a five-year business plan for the cluster beyond the project.
4. Form the SPV — a society, co-operative, producer company, Section 8 company or trust, with at least 33% artisan representation in the governing body. SPV formation is mandatory before final approval.
5. Arrange the land through a registered sale deed or a lease of at least 15 years in the Implementing Agency's name, and confirm availability of the IA's 10% cash share, or 5% in NER and hilly areas.
6. The Nodal Agency forwards the proposal to the Ministry, where the Scheme Steering Committee grants approval.
7. On approval the Nodal Agency issues a sanction order and opens the flow of funds. The first instalment of 50% of the hard intervention is released as an advance once the IA arranges land, and the second 50% after two-thirds of the first instalment is used.

An institution wishing to become a new Nodal Agency applies separately, in the prescribed proforma, to the Joint Secretary (ARI Division), Ministry of MSME, Room No. 171, Udyog Bhawan, New Delhi 110011.

How much does SFURTI pay?

Financial assistance for any project is capped at Rs 5 crore.

Within that ceiling, the funding pattern is:

The IA or SPV share may be deposited in phases, with a minimum of 25% in a single instalment. The IA cost covers the Cluster Development Executive's remuneration and incidental expenses for three years.

Beyond cluster budgets, the Ministry earmarks 3% of the total scheme allocation for administration and scheme management, an additional 5% that Nodal Agencies can claim for national and international thematic interventions such as brand promotion campaigns for khadi, herbal products, honey and organic food, and a further 2% for monitoring, evaluation and publicity.

What SFURTI actually pays for

Soft interventions include awareness and trust building, skill development across the value chain, institution development, exposure visits, market promotion, design and product development, and participation in technology workshops. The scheme also provides for mandatory Jan Dhan bank accounts, health insurance and Aadhaar-based identity cards for cluster artisans.

Hard interventions include common facility centres, raw material banks, upgradation of production infrastructure, tool kits and charkha upgradation, warehousing, training centres, and value addition and processing centres. Assistance for a raw material bank is meant to be leveraged with a financial institution for enhanced credit.

How SFURTI relates to other schemes

SFURTI and MSE-CDP are the Ministry's two cluster schemes, and the MSE-CDP guidelines state the intention of aligning them: MSE-CDP takes projects of Rs 5 crore and above for micro and small enterprise clusters, and routes anything smaller to SFURTI. SFURTI's beneficiaries are artisans and traditional industry workers, so an individual artisan seeking direct support is usually better served by PM Vishwakarma or a PMEGP loan than by waiting for a cluster project.

Help and contact

• ARI Division, Ministry of MSME: 011-23061543, telefax 011-23062858, email js.ari@nic.in
• Nodal Agency: KVIC, the Coir Board or the other listed institutions, depending on your sector
• Scheme page: msme.gov.in/schemes/sfurti

No fee is charged for submitting a SFURTI cluster proposal, and no agent can secure a cluster approval, every project is cleared by the Scheme Steering Committee.