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Establish a Common Facility Centre Under AP-CDP

The Government of Andhra Pradesh has committed Rs. 200 crore to establish at least 45 MSME Common Facility Centres across the State over five years. Grants cover 70 per cent to 90 per cent of project cost, up to Rs. 8 crore. ISU Consultancy LLP takes cluster groups through the entire process, from forming the SPV to commissioning the facility.

Empanelled Technical Consultant for the AP-CDP Cluster Scheme.

₹200 Crore

Total programme outlay

45 CFCs

Target over five years

Up to Rs. 8 crore

Maximum grant per project

Up to 90%

Grant share for special category clusters

Eligibility Criteria

The AP-CDP consulting support is designed for collaborative groups of micro and small enterprises operating within the state of Andhra Pradesh. This support facilitates the development of shared infrastructure projects that enhance the collective manufacturing capabilities of the cluster.

  • Formation of a legal entity representing the cluster members.
  • Demonstrated need for shared machinery or technical facilities.
  • Commitment to long-term operational sustainability of the proposed center.
  • Alignment with local industrial raw materials or high-employment sectors.

Prospective cluster groups should ensure they have a cohesive vision for their shared facility before pursuing a formal proposal. Our technical team provides guidance on assessing readiness and navigating the general prerequisites of the program.

Who Can Apply

Only manufacturing units are eligible under the scheme. Service and trading activities are excluded.

  • All manufacturing MSME units.
  • Registered Societies, Cooperative Societies, Farmer Producer Organisations and Farmer Producer Companies, eligible to participate in the SPV structure.
  • Mandal Samakhya at the mandal level, eligible to act as the organising body for formation of the SPV.
  • Self-Help Groups, eligible at group level only. Individual members may not participate.
  • Registered industry associations, subject to having a minimum of 200 registered MSME members, of which at least 100 hold valid Udyam Registration.
  • Existing Special Purpose Vehicles formed by a minimum of 10 micro and small enterprises for specific manufacturing activities, provided all such units hold valid Udyam Registration.

Entities Eligible to Participate

Requirements for the SPV

  • The SPV must be constituted as a legal entity: a Section 8 Company under the Companies Act, a Society under the Societies Registration Act, or a Cooperative Society under the relevant State or Central statute.
  • It must have at least 10 micro and small enterprises with Udyam Registration as members.
  • Members contribute the minimum prescribed amount as equity.
  • No single member may hold more than 20 per cent of the equity capital or equivalent contribution.
    Consultants, service providers and suppliers must be independent of the SPV in ownership and management, and may not lend to the SPV or its members for the project. ​

What Is Not Eligible

  • All service and trading activities.
  • Projects involving hazardous chemicals, causing significant pollution, or not complying with environmental regulations.
  • Production and processing related to tobacco and liquor-based products.
  • A CFC of similar type or nature within the same district in close proximity to an existing or already sanctioned CFC offering comparable facilities.

Government Investment & Subsidies

Under the AP-CDP scheme, the Government of Andhra Pradesh provides substantial financial grants to establish MSME Common Facility Centres. For projects up to Rs. 10 crore, the state offers coverage between 70% and 90% of the total cost, significantly reducing the capital burden on cluster groups and promoting industrial innovation across the state.

Category
Total project cost
GoAP contribution
SPV contribution
General
≤ ₹ 5 crore
80%
20%
General
₹ 5 to 10 crore
70%
30%
Women / SC / ST
≤ ₹ 5 crore
90%
10%
Women / SC / ST
₹ 5 to 10 crore
80%
20%

The GoAP grant is limited to Rs. 8.00 crore, or 70 per cent to 90 per cent of eligible project cost as per category, whichever is lower.

What Counts Towards Project Cost

  • Land and building 
  • Plant and machinery 
  • Equipment 
  • Preliminary and pre-operative expenses, and 
  • Margin money for working capital

Caps That Matter When Structuring the Project

  • Land and building: maximum 30 per cent of total project cost for ₹. 10 crore projects, and 20 per cent for ₹ 5 crore projects.
  • Preliminary and pre-operative expenses: not more than 2 per cent of total project cost.
  • Margin money for working capital: limited to actual requirement, subject to a maximum of 25 per cent of the first year's working capital requirement.
  • Cost incurred on land and building is permitted only as part of the SPV contribution, capped at the value of that contribution.

Eligible project cost is determined in a phased manner, with priority given first to machinery and equipment, then preliminary expenses, then pre-operative expenses. Margin money for working capital is considered only after those components are fully accounted for.

Preliminary and pre-operative expenses include company registration, DPR preparation, bank appraisal and tender preparation. Consultancy charges payable to a Technical Institution, covering support from conceptualisation through commissioning and initial operational handholding, and appraisal charges payable to a nationalised bank, are eligible project costs.

On Borrowing

  • Where bank finance is involved, a loan sanction letter confirming release of proportionate funds is mandatory before the GoAP grant is released.
  • Total bank loan and other borrowings raised by the SPV may not exceed 75 per cent of the SPV's total contribution to the project.
  • The SPV may not hypothecate or mortgage any CFC assets to raise borrowings.
  • Credit facilities may be availed from public sector, private or cooperative banks, and are eligible for CGTMSE coverage subject to prevailing guidelines.

Two Conditions Worth Planning Around

  • No cost overruns are allowed. Any escalation beyond the amount sanctioned by the Project Approval Committee must be borne by the SPV members.
  • The grant percentage is determined at the discretion of the Project Approval Committee, and may vary based on factors including Geographical Indication or One District One Product status, involvement of traditional artisans, and alignment with the AP Industrial Development Policy and the MSME and Entrepreneurship Policy.

How Grant Money Is Released

The State grant is disbursed in two instalments on a 70:30 basis, against contribution made by the SPV.

Before the First Instalment of 70 Per Cent Is Released

  1. Land must be registered or leased in the name of the SPV.
  2. The SPV must have opened a dedicated bank account for its contribution and the grant.
  3. The SPV must have provided its contribution upfront.
  4. An agreement must be signed with AP MSME DC.
  5. A transparent tender process must be completed through the AP e-Procurement portal, and a purchase order issued to the vendor.
  6. The General Manager, DIC must visit the site and submit a Physical Inspection Report.
    Building work must have reached at least 50 per cent completion.

Before the Second Instalment of 30 Per Cent Is Released

  1. Erection and commissioning must be complete, with staff training and trial run done.
  2. A Utilization Certificate from a Chartered Accountant, with component-wise expenditure of the first instalment.
  3. A Physical Inspection Report signed by the concerned General Manager, DIC.

Points That Catch Projects Out

  • Grant funds are released only into a dedicated project-specific account with a nationalised bank or a bank permitted by the Finance Department.
  • All payments to vendors must be made from that account within three to five days of receiving the grant. Delay beyond five days attracts a penalty of 0.1 per cent per day.
  • Interest accrued on the government grant must be remitted back to the Government of Andhra Pradesh.
  • Ownership of plant and machinery procured under the scheme vests with AP MSME DC, though the SPV has custody and use of it.

Tell Us About Your Cluster

If you are a part of an entrepreneur group considering a common facility or planning an industrial project in Andhra Pradesh, let’s have a technical discussion on how we can help you navigate the scheme requirements.

Disclaimer: The information provided on this page regarding the AP-CDP scheme is based on current government guidelines and is for information purposes only. Scheme parameters, grant caps, and eligibility criteria are subject to change by the Government of Andhra Pradesh. ISU Consultancy LLP provides expert technical and project consultancy but does not guarantee the sanction of grants, which remains at the absolute discretion of the relevant state authorities.

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