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KARNATAKA (INDIA) - ISRAEL PROGRAM FOR INDUSTRIAL R&D (KIRD)

A Bilateral Framework providing financial support for collaborative
industrial R&D ventures between Karnataka and Israeli companies

2nd Call for Proposals

ABOUT THE PROGRAMME

With the goal of supporting joint industrial R&D projects between Israeli and Karnataka-based companies, a Memorandum of Understanding was signed in March 2013 between MATIMOP - The Israeli Industry Centre for R&D, on behalf of the Office of the Chief Scientist (OCS) in Israel; and the Karnataka Science and Technology Promotion Society (KSTePS) and the Karnataka State Council for Science and Technology (KSCST), autonomous organizations under the Department of Science and Technology, Government of Karnataka, in India. Under the MOU, a program was established, referred to hereinafter as the Karnataka - Israel Program for Industrial R&D (KIRD), to create mechanisms through which small/medium scale industries located in Karnataka, may seek funding support for joint bilateral research and development (R&D) projects, involving at least one company from Israel.

This bilateral framework is jointly implemented and promoted by KSTePS & KSCST, under the Department of Science and Technology, Government of Karnataka, in Karnataka, India; and MATIMOP, the Israeli Industry Centre for R&D, on behalf of the Office of the Chief Scientist (OCS) in Israel.

These guidelines and information are specific to the Karnataka - Israel Program for Industrial R&D (KIRD), for projects submitted under a current Call for Proposals (CFP). KSCST & KSTePS and MATIMOP invite Karnataka-based companies and Israeli companies to submit proposals for bilateral industrial research and development projects.

2. AREAS IN WHICH APPLICATIONS ARE INVITED

This call is open to projects, based on merit, that include science and technology (S&T) development and product adaptation leading to commercial success, social good and benefit to both countries, in all technology fields. However, the following areas would be given priority for the current Call for Proposals:

- Mobile applications
- Bio-Informatics
- Medical Technology and Biotechnology
- Product Adaptation of existing Israeli products of value to Karnataka
- Green Technologies
- Clean Technologies

3. WHO IS ELIGIBLE TO APPLY

3.1 General

• Each proposal must include an eligible lead industrial partner each from the State of Karnataka and Israel.

• Although it is not mandatory, projects that engage a technology developer and a technology end-user/first customer are strongly encouraged.

• The program provides partner-matching assistance wherever needed.

 3.2 Karnataka Applicants

Eligible Karnataka applicants include: researchers and managers representing Karnataka-based companies which operate and are headquartered in the State of Karnataka.

• Under this scheme only companies/firms that qualify as 'small' / 'medium' as per the Micro, Small and Medium Enterprises Development Act, 2006 (Under the said Act a 'small' enterprise means a company having an investment in plant and machinery between Rs. 25.00 Lakhs and Rs. 5.00 Crores and a 'medium' enterprise is one which has investment more than Rs. 5.00 Crores but not exceeding Rs. 10.00 Crores.) are eligible.  

• Companies to qualify under this scheme must have their own R&D Center/must show inclination to set up dedicated R&D centre within the first year of the project - specifically with people and activities to support the project.

Please note:

1. Sole proprietors and partnership firms are not eligible for support under this Call for Proposals (CFP);

2. Companies must be incorporated under the provisions of the Companies Act, 1956 and should maintain a minimum of 51%Indian ownership.

3. The company should be registered with the Registrar of Companies, Karnataka at Bangalore and should have their registered office/Head Quarters in the State of Karnataka.

4. The company should be achieving a minimum of 30% Domestic Value Addition for a specific product segment.

5. Company should have employed at least 50% of its work force from Karnataka.

6. Representatives from subsidiaries of firms headquartered and owned outside Karnataka are not eligible to receive funding or subsidies from this program.

7. Would be required to commit investment of minimum 50% of the sanctioned project cost from its own sources of funds and 20% of 50% from their own assets.

3.3 Israeli Applicants

 Eligible applicants will be R&D performing Israeli registered companies operating in Israel.

KEY CRITERIA FOR SELECTION

a) An eligible company/a cluster of companies within the province of Karnataka or Israel will be responsible for the development and submission of the joint application.

b) At least one company each, from either of the respective State/country engaged in S&T product development &/or processes, should express a desire to cooperate in the research and development of a new product or a new process or in the adaptation/customization of an existing product/process to the Indian market.

c) Projects seeking funds under this scheme should have at least one company from Karnataka fulfilling the criteria specified at point 2 at section 3.2.

d) The project may involve more than one company from each side; academic/research entities are eligible to join as support systems/subcontractors to fulfil the objectives of the projects submitted for consideration.

e) The product proposed to be developed should either be:

Innovative with significant commercial potential and utility to both the partnering state/country and fairly ready for the market within a reasonably short turnaround time (12 - 18 months). The joint industrial R&D project should aim at development of products/processes leading to commercialisation in the global market, besides societal benefits for their region.

-OR-

Focused on the adaptation/customization of an existing product/process, belonging to the Israeli partner, in order to meet the needs and conditions of the Indian market, including but not limited to:

o Adaptation of product in consideration of local cultural considerations

o Adaptation to local conditions, such as climate, infrastructure etc.

o Regulatory considerations, particularly for foods and drugs

o Reduction of price to customer by the utilization of local components

o Reduction of price to customer by downgrading performance

o Establishment of beta-sites

Security considerations, such as removal of components requiring permission from the Ministry of Defense

*The project partners should agree in advance on the IP rights and on the commercialisation strategy of the product or process.(*Note: For the submission phase, only a preliminary agreement or MoU is required, however the final agreement has to be presented to the funding authorities, subsequently.)

f) The project should demonstrate the contribution of the participants from both the sides.

g) The project must be balanced between participants and significant to both partners.

h) The project period is generally between 12 and 24 months. However, wherever warranted, there can be an extension, after due scrutiny, for a further period. The entire project period shall, under no circumstance, extend beyond 36 months.

Any partner whose cooperative R&D or product adaptation project is consistent with the aforesaid criteria can apply to the present Call for Proposal (CFP) in accordance with the national Laws, Rules, Regulations and Procedures in effect.

PARTNER-MATCHING SERVICE

The Karnataka - Israel Program for Industrial R&D (KIRD) would offer partner matching service for companies who seek project partners for joint submission. Interested parties will have to submit a "Partner Search Form" to the program manager. The partner search form can be submitted anytime, and actually should be submitted as soon as possible after a call is launched - prior to the Bilateral Application Form (BAF).

FUNDING SUPPORT & TERMS OF REPAYMENT

Funding support will be provided to each partner through its own Implementing & Funding Organisation (either KSTePS & KSCST/DST-GOK in Karnataka or MATIMOP/OCS in Israel) as per approval of the competent authority, in accordance with the national laws, rules, regulations and procedures in effect.

In Karnataka

1. The total project cost under this scheme is limited to Rs. 1000 Lakhs of which 50% of funds would flow from Israel to the Israeli company.

2. Funding by the Government will be limited to an upper limit of Rs. 250 lakhs per project on the Karnataka side.

3. Government of Karnataka funds are in the form of conditional Grant / Loan with interest @ 3%/annum and repayment extending up to 10 years with moratorium up to 2 years from the date of commencement of production.

4. Soft loan from GoK shall be unsecured and shall be subordinate to loans from Banks/FI in relation to repayment.

5. Participating R&D group / Academic Institution along with a commercial entity may be considered for a grant in Aid support by the Project Evaluation Committee, keeping in view the requirement for product development. Indian R&D organisation/academic institution may receive up to 100% of their costs by way of Grant-in-aid. The Grant will be concurrent with loan and it shall not exceed 20% of the funds recommended for release to the project, by the Government.

6. Karnataka industry desirous of being considered under this scheme has to indicate investment from its own source, by way of fixed assets (like land, building and relevant machinery), bank/FI loan, promoter contribution etc. along with a minimum of 25% by way of its own finance (Cash) to ensure availability of adequate funds while implementing the project without any difficulty.

7. Before the sanction of funds under KIRD, an agreement is required to be executed by the industry partner for the jointly approved project with theKSCST, DST-GOK.

8. In some specific cases, as per the recommendation of the Project Evaluation Committee, the grantee company may have to commit to a specific proportion of the grant received, to be repaid in the form of products developed under the project to support fulfilling the social responsibility of the government (eg. If the company has developed a specific gadget, say water purifier/low cost lighting system - then this device needs to be given to government through one of its agencies/departments to be deployed in a certain part of the state for the benefit of the society.

9. The Government may consider extending support in up scaling the activity wherever the supported project has shown a very promising product or technology having commercial/social value thereby leading to direct/indirect benefits to the state and its people.

10. Financial assistance by way of GoK loan to the project shall be provided through KSTePS. GoK has already released budgetary support to KSTePS for onward support to the units.

How to assess the financial capabilities of the promoters or what is the process of Financial Due Diligence

Process would involve examining the financial strength of the promoters and the financial feasibility/viability of the Project, which would necessitate obtaining and examination of the following:

In case of existing units

a. Organizational structure of the unit - proprietorship, partnership firm or a registered Company (Public or Private Limited) and its track record since inception;

b. Detailed Project Report (DPR) for the new project covering all aspects viz. Promoters, infrastructure requirements - land, building, plant & machinery, power & water requirements, labour & raw material requirement and its availability, production capacity, market demand forecast & marketing arrangements, cost of the project & means of financing and financial projections for the period over which loans are to be repaid;

c. Review of the partnership deed(for partnership firms) or memorandum & articles of association (in case of Public or Private Limited Companies) to understand the legal status, covenants and restrictions in terms of management, taking up new projects, borrowing powers of the entity and related aspects;

d. Review of the audited financial statements(in case of proprietorship and partnership firms, only audit will be audit under Sec. 44AB of the Income Tax Act, 1961, provided annual turnover is more than Rs 1 crore, as no other audit is applicable for such units). If the unit is more than 3 years old, financial statements for the last 3 years may be reviewed;

e. Income Tax return copies for the previous year/s and last three years, in case of units more than 3 years old;

f. Obtention of credit report from the Bankers of the unit and ensure that the credit facilities availed from the Banks/FIs are regular and performing (In case term loans are availed, repayment is irregular);

g. Networth statement of the promoters;

h. If the unit is proposing to implement the new project with loan assistance from Banks/FI, in principle sanction letter from the Bank/FI to support the project and provide the required credit facilities(It is possible that the Bank/FIs may insist on similar in principle support letter from the KSTePS for providing 50% soft loan assistance under KIRD);

i. Details of pending suits/legal actions and statutory/tax dues in the name of the entity and likely impact, if the suits/actions are decided against the unit.

In case of new units/ first time entrepreneurs

a. If the project is sought to be implemented by first time entrepreneurs, obviously they have no track record on which one could rely upon. In such an event, due diligence would have to focus more on the abilities of the promoter/s to implement the project and make a success of the same(technical and financial capabilities to be assessed carefully)

b. All details/statements as above would be required to be obtained and reviewed(except review of financial statements for the earlier years or three years, as the case may be, status of the existing credit facilities & they are regular/performing and status of pending legal suits/actions as also statutory dues/taxes, which are applicable for existing units).

11. The funds would be released in phases with completion of agreed upon landmarks/fulfilment of objectives.

In Israel

1. Funding will be provided in the form of a conditional grant (returnable soft loan) to the projects selected under the RFP

2. The total funding from the Government of Israel via the OCS, under the i4RD financial support, will not exceed 50% of the eligible and approved costs of the R&D, in accordance with the national laws and regulations.

3. When a project results in sales of a product, service or process, the financial support must be repaid to the Office of the Chief Scientist according to its regulations (In general, royalties are paid at rates beginning at 3% of sales, depending on various criteria. Royalties are payable until 100% of the amount of the grant has been repaid with interest as provided in the applicable regulations).

4. For more information on funding conditions, applicants should visit the website of the Office of the Chief Scientist:

http://www.moital.gov.il/NR/exeres/270E524E-FDC2-4E8B-8244-48ABAD6FC620.htm

7. THE APPLICATION PROCESS

7.1 APPLICATIONS

To ensure the effective delivery of the CFP and reinforce the principles of bilateral partnership, MATIMOP and KSCST in consultation with KSTePSwill employ a joint, two-step application process for each Call for Proposals.

7.1.1. Step 1: Bilateral Application Form (BAF)

A BAF provides a summary of the proposed project with enough detail for the reviewers to make an initial assessment of the merits of the project. Submission of a BAF is mandatory, and is the first required document that companies must submit. The form should be filled out by both applicants together, and identical copies should be submitted to the program managers in India and Israel on or before the mutually agreed upon deadline - November 30, 2014 (extended till 31st December 2014) to be eligible for further consideration.

The Bilateral Application Form (BAF) must be sent in softcopy via email simultaneously to both the Implementing Organisations - KSCST in Karnataka, India and MATIMOP in Israel -within the deadline of the particular call period. The BAF must be signed by both Karnataka and Israeli partners, and must include a Letter of Intent or MOU detailing IP plans for the project. Incomplete BAF template or BAFs submitted in any other format will not be accepted.

KSCST and MATIMOP will acknowledge the receipt of all BAFs within five working days of receipt.

The BAF would then be referred for technical review. This process may take around 30 to 45 days from the date of receipt of the BAF. Upon approval, the companies will receive notification as to whether or not they can move to Step 2 in the application process. If approved, companies will be requested to submit a full project proposal to their local implementing agency - separately but in parallel, in Karnataka and Israel, based on local requirements, normally within 45 days.

7.1.2 Step 2: KIRD Full Project Proposal (FPP)

The deadline for the KIRD Full Proposal Format application is based on the mutually agreed upon published date December 30, 2014 (extended till 15th January 2015).

Partners meeting all eligibility criteria and whose BAFs are approved will be invited to submit the KIRD Full Project Proposal (FPP) no later than the agreed upon deadline, according to the procedures and rules that apply in their country / state - for Karnataka-based companies, based on the rules and instructions of KSCST / KSTePS and the Department of Science & Technology, Government of Karnataka; and for Israeli companies, based on the rules and regulations of the OCS respectively,

Applicants are required to follow the local requirements and use the provided application format with instructions (placed in the KSCST website for downloading) and submit their proposal. Proposals that are not in the approved format will not be accepted.

Applications submitted after the deadline of the call period will be considered eligible for the next call period.

In Karnataka

The Karnataka partner is required to submit 5 hard copies and an electronic version on a CD of the completed and signed KIRD Full Project Proposal (As per the Format) to KSCST at the coordinates provided at the end of the document. Instructions and required forms will be provided to applicants.

Each application must be signed by an official who is legally responsible for the project and endorsed by the chief executive or leader of the applicant organization. Electronic signatures will be accepted on applications submitted to KSCST and MATIMOP.

In Israel

The Israeli partner is required to submit an OCS National Application form in accordance with the OCS regulations, through an online system. A signed copy of the Bilateral Application Form is required to be uploaded as well. The application in the prescribed format should be submitted to MATIMOP as well at the coordinates provided at the end of the document. Please review the "Guidelines for Israeli Companies" document for more information.

7.2 eVALUATION AND sELECTION OF THE PROJECTS

KSCST in Karnataka, India and OCS/MATIMOP in Israel will carry out an independent evaluation of the joint R&D application and will select the eligible project to be financially supported in accordance with their State Laws and Regulations. The successful projects will be jointly selected by the two funding organizations at a "KIRD Joint Committee Meeting" based on the project criteria and requirements specified in the application form. Companies who receive joint approval will be notified by their local implementing or funding agency.

EVALUATION PROCESS (Phase-I and Phase-II)

PHASE I

a) Receipt of BAF (Bilateral Cooperation form) from applicants

b) Preliminary evaluation and grading by the experts (experts are chosen from prominent academic institutions / industries / government departments.

c) Acceptance/Rejection based on the grading by experts.

PHASE II

a) Receipt of FPP (Full Project Proposal) from accepted proposals in Phase-I

b) Second evaluation of accepted proposals by experts and further qualitative and quantitative assessment, based on KIRD criteria. FPP will independently be evaluated by at least three experts.

c) Applicants also make presentations before experts.

d) Visit to the companies by the experts to assess infrastructure and other facilities available at the companies (to support their evaluation).

e) Approved FPPs to be screened by the Committees.

SELECTION PROCESS

1. The Screening Committee will discuss the approved FPPs and decide on acceptance of proposals for funding and forward it to the Joint Committee

2. The Joint Committee will take the final decision on funding.

7.3 NOTIFICATIONS OF THE RESULTS

Parties whose projects have been selected will be informed of the result and the amount of funding for the successful projects by their respective implementing organization in a timely manner.

8. DEADLINES& RELEVANT DATES*

CONTACTS

* ~ * ~ *

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This page was updated on : Friday, August 28, 2020 02:32 PM