The World Bank Technology Center Systems Project (TCSP) (P145502) REPORT NO.: RES43152 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF TECHNOLOGY CENTER SYSTEMS PROJECT (TCSP) APPROVED ON APRIL 25, 2014 TO THE REPUBLIC OF INDIA FINANCE, COMPETITIVENESS AND INNOVATION SOUTH ASIA Regional Vice President: Hartwig Schafer Country Director: Junaid Kamal Ahmad Regional Director: Zoubida Kherous Allaoua Practice Manager/Manager: Esperanza Lasagabaster Task Team Leader(s): Michael Olavi Engman, Albert Sole Canut The World Bank Technology Center Systems Project (TCSP) (P145502) ABBREVIATIONS AND ACRONYMS DEA Department of Economic Affairs GoI Government of India IFY Indian Financial Year MoMSME Ministry of Micro, Small and Medium Enterprises MSME Micro, Small and Medium Enterprise PDO Project Development Objective PMU Project Management Unit TC Technology Center TCM Technology Cluster Manager TCSP Technology Center Systems Program 1 The World Bank Technology Center Systems Project (TCSP) (P145502) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P145502 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 25-Apr-2014 30-Sep-2020 Organizations Borrower Responsible Agency Republic of India Ministry of Micro, Small and Medium Enterprises Project Development Objective (PDO) Original PDO The Program’s Development Objective (PDO) is to enhance the productivity of MSMEs by improving their access to technology and business advisory services as well as skilled workers through systems of financially sustainable Technology Centers (TCs). Current PDO The objective of the Project is to increase access to technology and skilled workers for micro, small and medium enterprises at Technology Centers. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing (US$, Millions) Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-83300 25-Apr-2014 10-Nov-2014 19-Dec-2014 30-Sep-2020 150.00 100.30 49.70 2 The World Bank Technology Center Systems Project (TCSP) (P145502) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The Project underwent a level 2 restructuring on March 21, 2018, to simplify the Project Development Objective (PDO), revise both disbursement estimates and indicators, reallocate budget amounts between components and cost categories, and increase the percentage of expenditures to be financed. 2. On June 25, 2020, the Department of Economic Affairs (DEA), Ministry of Finance, requested a three-month extension of the Project’s closing date on an interim basis that would allow for a more orderly finalization and close out of ongoing activities adversely affected by the COVID-19 pandemic that started to affect the country at the beginning of March 2020. The DEA’s request also included a partial cancellation of undisbursed loan funds of US$50 million since this amount will be covered separately by the Government of India (GoI) after the closing of the Project on September 30, 2020. 3. As of August 13, 2020, progress with the delivery of advanced machinery, labs and equipment ordered for the technology center network has progressed slowly due to the prolonged effect of COVID-19. Between July and September 2020, 2 new roadmaps have been finalized, bringing the total number to 12, one more than the initial target. The preparation of training courses during this period is also progressing adequately. In terms of commitments and disbursements, a letter of award for the construction of the new Technology Center (TC) in Patna worth US$13 million was signed in July 2020 (disbursement against the contract will start in October 2020) and US$1 million of equipment was also awarded. Total disbursements for Q1 (fiscal year 2021) are expected to add up to US$ 10 million. 4. On July 29, 2020, the DEA requested an additional three-month extension of the Project’s closing date until December 31, 2020 based on an assessment prepared by the Ministry of Micro, Small and Medium Enterprises (MoMSME) on the impact of the COVID-19 pandemic, which started to affect the country at the beginning of March 2020. According to the MoMSME, the pandemic has caused a backlog of 3 to 4 month in delays, leaving little margin for progress of ground activities during the first 3-month extension until September 2020. II. DESCRIPTION OF PROPOSED CHANGES 5. The proposed restructuring will extend the closing date of the Project from September 30, 2020 to December 31, 2020. This will allow the Ministry of Micro, Small and Medium Enterprises (MoMSME) to continue with the procurement and commissioning of advanced machinery at new TCs, carry on with civil infrastructure works for 3 more new TCs which are expected to be completed between October and December 2020 (bringing the total 3 The World Bank Technology Center Systems Project (TCSP) (P145502) to 6 new TCs). An additional US$12 million will be disbursed during this period in the new works contract for the TC in Chennai, the delivery of more machines as well as the commissioning of already delivered equipment. 6. During the last restructuring of June 2020, three target indicators were reviewed to adjust to the closing date of September 30, 2020. Two of these are being adjusted again to account for the expected outcomes until the new closing date of December 31, 2020. First, the additional three months of implementation will allow for one more technology road map to be developed. Second, the additional time of implementation will also allow for three more technology centers to be completed. Values for each year column in the results framework follow the Indian Financial Year (IFY) because the TCs need to adjust to this calendar when submitting their Key Performance Indicators (KPIs). Thus, ‘Year 7’ covers progress starting April 1, 2020 to March 31, 2021. ‘End targets’ capture anticipated results for the period starting April 1, 2020 until the extended closing of the project in December 31, 2020 and were calculated prior to the COVID-19 pandemic. The PMU will be able to update these in October, 2020. III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Loan Closing Date(s) ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ PBCs ✔ Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ Safeguard Policies Triggered ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ 4 The World Bank Technology Center Systems Project (TCSP) (P145502) Implementation Schedule ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-83300 Effective 30-Jun-2020 30-Sep-2020 31-Dec-2020 30-Apr-2021 . 5 The World Bank Technology Center Systems Project (TCSP) (P145502) . Results framework COUNTRY: India Technology Center Systems Project (TCSP) Project Development Objectives(s) The objective of the Project is to increase access to technology and skilled workers for micro, small and medium enterprises at Technology Centers. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 Project Development Objectives (Action: This Objective has been Revised) Number of work orders accepted by technology 23.00 32.00 36.00 34.00 36.00 38.00 41.00 46.00 41.00 centers (annual, in '000) (Number) Number of individual enterprises accessing services at technology 0.00 5.70 6.00 6.30 6.90 7.60 6.90 centers (annual, in '000) (Number) Number of medium- and long-term trainees employed within six months of graduation 3.60 5.70 6.10 6.40 6.70 7.00 7.70 8.50 7.70 from technology centers (annual, in '000) (Number) 6 The World Bank Technology Center Systems Project (TCSP) (P145502) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 Intermediate Results Indicators (Action: This Component has been Revised) Revenue generated by technology centers from production 4.80 7.90 7.80 7.00 7.80 8.20 8.60 9.00 8.60 support and consultancy (annual, in million) (Amount(USD)) Capacity utilization of existing technology 55.00 59.00 71.00 73.00 73.00 74.00 74.00 75.00 75.00 center machinery (Percentage) Cumulative number of technology roadmaps developed by TCM and 0.00 0.00 0.00 0.00 0.00 4.00 4.00 11.00 12.00 endorsed by industry associations (Number) Rationale: Action: This indicator The two project extensions will allow the TCM to increase the number of finalized technology roadmaps to 12. As of August 31, 2020 a total of ten roadmaps have has been Revised been finalized. Number of trainees trained (annual, in 77.00 159.00 180.00 150.00 160.00 170.00 180.00 200.00 180.00 '000) (Number) 7 The World Bank Technology Center Systems Project (TCSP) (P145502) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 o/w external trainers trained 1.00 0.00 0.00 6.00 4.00 4.00 4.00 4.00 4.00 (Percentage) o/w female 10.00 13.00 16.00 13.00 14.00 15.00 17.00 18.00 18.00 (Percentage) o/w from low income states 30.00 35.00 36.00 43.00 40.00 40.00 42.00 44.00 44.00 (Percentage) o/w from disadvantaged 29.00 38.00 43.00 41.00 35.00 40.00 42.00 44.00 44.00 section of society (SC/ST) (Percentage) Cumulative number of skills development contents for Centers of Excellence approved by 2.00 0.00 0.00 0.00 0.00 0.00 3.00 3.00 5.00 industry associations and/or certifying agencies (Number) Cumulative number of new technology 0.00 0.00 0.00 0.00 0.00 2.00 5.00 6.00 6.00 centers built (Number) Rationale: Action: This indicator With three additional Technology Centers to be completed between September and December 2020, the total number of TCs completed during the lifetime of the has been Revised project is six. 8 The World Bank Technology Center Systems Project (TCSP) (P145502) RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 Gross profit by existing technology centers before depreciation 3.50 14.30 14.90 9.20 10.00 11.00 12.00 12.00 12.00 excluding land (million) (Amount(USD)) IO Table SPACE 9 The World Bank Technology Center Systems Project (TCSP) (P145502)