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PROJECT FUNDINGGUIDELINES

TECHNOLOGY DEVELOPMENT BOARD

Department of Science and Technology

Government of IndiaTechnology Bhavan, New Mehrauli Road,New Delhi-110016

(December 2000)

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CONTENTS

1. What the Board does 22. Who can be funded 23. What type of projects can be funded 5

4. Which activities / expenditure can be funded 65. Accessing the fund 86. Evaluation criteria 107. Pro-active role 118. Contractual matters 129. Disposition of intellectual property 1210. Money from the Board is not available for 1211. Submission of application 13

* Application Form 14* Additional information to facilitate evaluation of the proposal 17

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FUND FOR TECHNOLOGY

DEVELOPMENT AND APPLICATION

PROJECT FUNDING GUIDELINES

In 1996, for the development and application of indigenous technology in a dynamiceconomic environment, the Government of India enabled the placing of the proceeds of anexistant cess on the import of technology into a fund called the Fund for TechnologyDevelopment and Application. To administer the Fund, the Government also constituted aTechnology Development Board on 1st September, 1996, invoking the provisions of theTechnology Development Board Act, 1995. This booklet provides guidance to help theentrepreneurs to access the Fund.

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1. What the Board does

The Technology Development Board invests in equity capital or gives soft loan to industrialconcerns and other agencies, as applicable, attempting development and commercial applicationof indigenous technology, or adapting imported technology to wider domestic applications.

2. Who can be funded

2.1 Enterprises, co-operatives and other agencies which have as one of their objectives the development and application of technology-based product or service, areeligible to seek money from the Board.

2.2 If the project is for the commercialization of technology developed by a domesticR&D institution, the enterprise should apply, along with an agreement/ MoU with itspartner R&D institution. The R&D institution shall be any one of the following :-

- National laboratories

- State laboratories

- Academic institutions

- Co-operative Research Associations

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- Registered R&D Foundations/Trusts/Societies

- In-house R&D units in industry recognised by Government (Department of Scientific and Industrial Research – DSIR)

- Scientific and Industrial Research Organisations recognised by Government(DSIR)

- Commercial R&D companies recognised by DSIR

2.3 If an enterprise has developed the technology with the assistance of an R&Dinstitution (as listed in 2.2 above), the application to the Board by such enterprise or itsassociates will also be considered.

2.4 Applications from enterprises, with or without any other partners, for commercialization of indigenous technologies may be considered if the project is for commercialization of technology developed through the financial support providedunder Home Grown Technology (HGT) /Mission projects/ Technology Vision 2020implementation projects of Technology Information, Forecasting and AssessmentCouncil (TIFAC)

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or under the Programme Aimed at Technological Self Reliance (PATSER) of DSIR or under the Technopreneur Promotion Programme (TePP) jointly operated by DSIR andDST.

2.5 Start-up companies and/or technocrat-entrepreneurs, with or without any other partners, in agricultural, product processing, information technology or designing and

development special engineering machinery are encouraged to apply for projects inthese areas.

2.6 Where legal title to domestically generated intellectual property is held (or filedfor) by an individual generator (e.g. inventor) of such property or by an industrialconcern, such individual or industrial concern shall also be eligible to apply.

2.7 If the activity is for adapting and commercializing imported technology, financialassistance from the Board may be provided for:-

(i) effecting crucial modifications for wider domestic applications through an R&Dinstitution’ (listed in 2.2 above) or through an individual (2.6 above) and/or.

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(ii) Further development of commercialisable technology, imported when that technology isat ‘proof-of-concept’ or design stage.

3. What type of projects can be funded?

The type of projects include –

- Development and commercialization of a new product/process/applicationthrough indigenous technology.

- Significant improvements in the existing product/process/application

- Substantial quality upgradation, reduced material consumption, reduced energyconsumption, cost reduction, improved competitiveness, improved ergonomics

- Development and deployment of technology or design to satisfy existingoccupational health and/or standards, or improve upon them.

- Development and deployment of technology or design necessary to satisfy

domestic or foreign environmental requirements or standards current or anticipated.

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- Development and deployment of technology or design necessary to satisfy therequirements of domestic legislation, and/or decision of the judiciary or product liabilitylegislation in export markets.

- Adaptation/modification to product/process which has been imported so as tomake it suitable for wider domestic application.

- Replacement of imported raw materials/components with indigenous substitutes.

- Providing the socio-commercial viability of new and/or renewable sources of energy commercially deliverable to consumers.

- Development of technology to meet the medical standards and proving socio-commercial viability of biochemical equipment and devices.

- Hazardous waste recycling management.

4. Which activities/expenditures can be funded?

These may include –

- Development, test and evaluation necessary for establishing proof-of-applicabilityof product, process or application.

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- Costs of a capital nature including cost of acquisition of technology of foreignorigin which is at “proof-of-concept” or design stage requiring substantial indigenoustechnology development.

- Fabrication, testing and trial of prototypes.

-Setting-up pilot/demonstration plant including testing and trials.

- Industrial product design.

- Field trials (including limited market development, except as stand-alone activity).

- Setting-up the first or demonstrator commercial scale manufacturing unit usinginnovative technology.

- Cost of studies, surveys and blue or grey-collar training necessary or incidentalto the above.

- R&D/engineering consultancy for prototype/pilot plant/trials and testing.

The expenditure incurred by the applicant before the date of application shall not bereimbursed.

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5. Accessing the Fund

The Board may provide, in instalment (s), equity capital or soft loan to enterprises, or grantsto R&D institutions (generally through enterprises).

(a) Equity participation:

(i) The Board may invest by way of equity capital in a company, on its commencement,start-up and/or growth stages according to the requirements as assessed by the Boardand keeping in view he debt-equity ratio of the industrial concern.

(ii) The Board may invest in equity shares of a company upto 25 percent of the projectcost, including margin money for working capital, provided such investment does notexceed the capital paid-up by the promoters.

(iii) The Board shall have the right to nominate, from time to time, a person or persons tobe a Director or Directors of the Board of Directors of the company. The nomineeDirector (s) shall, however, not be required to hold qualification shares or shall not beliable to retire by rotation.

(iv) The Board may, after examining the application of the company and after making

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such enquiries as it deems necessary either approve the equity participation with or without additional conditionalities or refuse to approve the same.

(b) Loan assistance:

Although the assistance from the Board will take into account the totality of the financial

environment in which the enterprise is to operate, the loan will normally be limited upto half theapproved out lay on the activities eligible for funding. The enterprise has to produce evidence of arrangement for the remainder of the money required.

A commitment letter from a third party investor such as another established company, aventure capital company, financial institution or commercial bank will facilitate speedier processing.

The interest on loan shall be at the rate of six percent per annum (simple interest) and mayrequire collateral guarantees.

The duration of the project should not normally exceed three years.

The Board shall consider each application on merits and mere fulfilment of these guidelinesshall not qualify an application for financial assistance.

The repayment of loan, together with interest thereon, shall commence within one year after the project is completed and shall be repaid in five year.

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6. Evaluation criteria

Applications will be evaluated for their scientific, technological, commercial and financialmerits. The evaluation criteria include :

- the soundness, scientific quality and technological merit

- the potential for wide application and the benefits expected to accrue fromcommercialization

- the adequacy of the proposed effort

- the capability of the R & D institution (s) in the proposed action network

- the organisational and commercial capability of the enterprise including itsinternal accruals.

- the reasonableness of the proposed cost and financing pattern.

-measurable objectives, targets and milestones.

The evaluation will include on-site visits.

7. Pro-active role

The Board has decided to take a pro-active role in addition to responding to the proposalsreceived. This

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thrust is at heart of Board’s Vision document. Its aim is to enhance exports or towards producingcompetitive consumer products; encourage industries and R & D institutions for productinnovation or improvisation to suit the Indian market; technology to be goal-oriented, sociallyrelevant and profitable. It will identify and act in areas requiring strategic interventions. The Board,encourages new ideas from small enterprises even at the risk of failures.

While a few Indian industries themselves are capable of taking a lead to access moderntechnologies, other industries may utilize technologies developed and lying dormant with nationallaboratories. The pro-active role of the Board lies in creating formal linkages to generate viablepartnerships.

Information for selecting suitable projects is available in the TIFAC reports on TechnologyVision for India upto 2020; proposals which aim at implementing/improving upon them may alsobe considered.

8. Contractual matters

All approved proposals will be financed under negotiated contract. The clauses mayinclude, inter alia, payment of royalty for a limited period on commercialization, nomination of Director (s) on the Board of Directors (when the Board provides equity), buy-back/disposal/pledging of shares, providing collateral guarantees, hypothecation and/or mortgageof assets,

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project monitoring, inspection, re-payment schedules, termination, resolution of disputes, etc.

The Board may receive royalty, for a specific period, as may be mutually agreed upon, onthe annual sales turnover of a product/service developed with the Board’s financial assistance.Royalty may be payable during the pendency of the loan.

A specific payment schedule will be incorporated in the contract. The payment will be madeperiodically as per work programmes in accordance with risk-associated milestones.

9. Disposition of intellectual property

The disposition of intellectual property is a bilateral contractual matter between thetechnology provider and the enterprise. However, the Board may retain a royalty-free licence for the use of the intellectual property for the purposes of the Government of India; and reserves theright to require the holder of the intellectual property to licence others in certain pre-agreedcircumstances to manufacture and or sell the product in India.

10. Money from the Board is not available for.

-

Refinancing.

- Basic research.

- Establishment of new R&D centres.

- Travel, conferences, workshops, etc. unless they form an essential component of the project approved by the Board.

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- Writing of books or reports of collection of statistics or surveys unless they forman essential component of the project approved by the Board.

- Any form of grants-in-aid or loan for the mere creation of technical infrastructure.

- More than two projects at one time to an industrial enterprise.

11. Submission of application

Applications and supporting documents should be submitted to the Secretary, TechnologyDevelopment Board, in the enclosed format. Technical reviewers will base their conclusions oninformation contained in the proposal and on the on-sit evaluation. Ten copies of application mustbe sent in the same package, to-

The Secretary


Department of Science & Technology

Technology Bhavan,

New Mehrauli Road,

New Delhi-110016

Tel. No.: 6516073, 6962819, 6567373

Fax: 6857643, 6863847, 6524898

Note: The Board reserves the right to amend these projectFunding Guidelines, without notice.

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APPLICATION FORM

(FORM – A)

(Rule 19 (2): Any applicant who is desirous to seek financial assistance from the Fund for

Technology Development and Application, shall apply to the Board in Form – A)

Important: Please fill up the form furnishing correct details sought for based on verifiabletrue state of affairs without causing suppression of any material information, which if resorted to,shall entail refusal of the financial assistance under the Technology Development Board Act,1995.

1. Name and full postal address of the applicant :

2. Name of the industrial concern, research and development institution or other agencyseeking/applying for financial assistance and its date of establishment :

3. Whether registered under Societies Registration Act, 1860 (21 of 1860) or any

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other relevant Act or created under any other Act:

4. If yes number and year of registration/creation (Attested copy of registrationcertificate to be enclosed):

5. Whether the organisation is of national/state level:

6. Details of the Managing Committee/Board alongwith names, addresses andoccupation of the office bearers:

7. Brief details of the organisation, objectives and activities during the last threeyears

8. Complete particulars of technology (indigenous/imported):

9. Purpose for which the amount is required (Please state details of the project andits proposed implementation):

10. Amount and nature of financial assistance required, item wise details under recurring/non-recurring to be enclosed.

11. Time schedule of the project activities (annex a bar chart)

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12. The total amount incurred/invested by the applicant, or likely to be incurred bythe applicant:

13. Sources of funding of balance amount, whether the organization is gettingfinancial assistance from any other official/non-official source. If yes, give details

14. Details of prosecution, if any, in a court of law launched against the applicant,during the last five years in civil, criminal or taxation matters:

15. Copies of the following documents to be attached:

(i) Constitution of the organisation and Articles/Memorandum of Association asapplicable:

(ii) Annual report and audited statements of accounts (last three years):

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ADDITIONAL INFORMATION TO

FACILITATE EVALUATION OF THE

PROJECT PROPOSAL

1. Title of the project :

2. Source (s) of technology – details there of :

* Indigenous : Name and status of R&D :institution, includingin-house R&D Unit (if recognised by DSIR) :

* Imported : Name & Status of the foreign collaborator

3. Has the technology been patented or how is the intellectual property protected?

4. Enclose a copy of MoU/agreement entered into with the technology provider :

5. Role of other participating agencies/R&D institutions :

6. Indicate the status of availability of land and its location :

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7. Estimated cost of the project (enclose detailed break-up)

- Equipment & Facilities.- Material and consumables :-

Salaries and wages :- Consultants & experts :- Fees to R&D institutions :- Project related travel :- Trial runs :

- Marketing expenses during development period

-C

ontingencies :- Miscellaneous (specify) :TOTAL:

8. Means of financing and tie up arrangements : Equity/Loan

- By promoters :- By financial institutions/banks :- By Technology Development Board :- By other sources (specify) :

TOTAL

9. Details of expenditure already incurred, with source of financing, on this project by way of both equity and secured as well as unsecured loans

10. Indicate the type of collaterals you wish to provide for the loan/equity :

11. Indicate the period and percentage of royalty on turnover which you are willing to pay :

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12. Instalment releases (to be lined to Time Schedule at col. 11 in Form A) :- Instalment numbers: I II III IV- By promoters- By financial institution/bank- By Technology Development Board From other sources

TOTAL

13. Furnish details of financial assistance received from other financial institution for any other project (s) of the applicant.

14. Enclose a techno-economic feasibility report (covering existing business, in-house R&D,business plan for executing the project, supply of raw materials, market survey, potentialcustomers, marketing strategy, socio-economic, environmental and safety issues, utilities,profitability projections and related ratios, cash flow, debt servicing etc.) :

15. Additional information in support of the project, e.g. expected quantified benefits,materials/energy saving, environmental aspects etc. :

16. List of enclosures submitted with the application. :

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DECLARATION

(to be signed by the applicantor

its authorized agent)

The particulars heretofore given are true and correct. Nothing material has beensuppressed. It is certified that I/We have read the guidelines, terms and conditions governing thescheme and, undertake to abide by them on behalf of my/our organisation/institution. Thefinancial assistance, if provided, shall be put to the declared use. (Strike out whichever isinapplicable)

APPLICANT/AUTHORISED SIGNATORYwith seal

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