Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation, an Indian Government scheme launched in October 2000. Scheme provides an upfront capital subsidy for upgrading technology for new or existing Micro, Small and Medium Enterprises (MSMEs).
The scheme provides up to 15% of the capital subsidy for over 1 crore rupees (upper limit is 15 lakhs) for MSMEs such as khadi, poultry, cattle feed, and other tiny industries. However, the scheme’s expenditure has no upper limit and is demand-driven. Accordingly, to upgrade to the latest or nearly latest technology and equipment funds endorsement required. With an aim to produce improved quality products and have high productivity. This scheme currently encompasses 51 sub-sectors/products.
Note: Replacement of the current equipment with the same ones or purchasing of second-hand equipment shall not be entertained under this scheme.
The scheme strives to attain the following goals:
- To provide technologically advanced equipment’s to MSMEs
- Upgrade MSME’s plant and machinery with the latest technology necessary for enhancement
- To aid in their expansion, if needed
Eligibility Conditions under CLCSS
The present 51 Sub-sectors or Products covered under the up-gradation scheme as per Guidelines pdf passed on 13th August 2019 are as follows:
- Biotech Engineering
- Effluent Treatment Plants
- Crenelated Boxes
- Drugs and Pharmaceuticals
- Medicinal and Aromatic plants- based industries
- Plastic cast/ Extruded Products.
- Rubber Processing enterprises
- Food Processing
- Poultry & Cattle Feed Industry
- Stone Industries (excluding Quarrying and Mining), Glass and Ceramic Items including Tiles
- Leather and Leather Products
- Electronic equipment viz examination, measuring and assembly, Industrial process control; Analytical, Medical, Electronic Customer & Communication equipment, etc.
- Fans & Motors Industry
- Hardware Information Technology
- Mineral enclosed Heating Elements
- Transformer/ Electrical Stampings/ Laminations /Coils/Chokes
- Wires & Cable Industry
Combustion Devices/ Appliances
- Forging & Hand Tools
- Foundries-Steel and Cast Iron
- General Engineering Works
- Gold Plating and Jewellery, Locks, Toys
- Non-Ferrous Foundry, Steel Furniture, Steel Re-rolling and lore Pencil Ingot making Industries, Welding Electrodes
- Sport Goods
- Ready-made Garments
- Wooden Furniture
- Paints, Varnishes, Alkyds, and Alkyd products
- Agricultural Apparatuses and Post- Harvest Equipment
- Khadi and Village Industries, Sewing Machine Industry
- Coir and Coir Products
- Zinc Sulphate, Beneficiation of Graphite and Phosphate, Industrial Gases
- Printing Industry
- Copper Strip Industry, Ferric, and Non-Ferric Alum
- Pesticides Preparation
If your industry comes under one of these sectors/products, then you are eligible to apply for the up-gradation scheme. These comprise sole Proprietorship, Partnership, Co-operative societies, Private and Public limited companies in the SSI sector. In addition, it must be highlighted that priority shall be given to Women entrepreneurs.
Capital subsidy in Scheme will be obtainable for projects where terms loans have been certified by the eligible PLI (Primary Lending Institution) on or after September 29, 2005.
Equipment acquired under the Hire Purchase Scheme of the NSIC is also qualified for subsidy in this Scheme.
Industries that are converting from small to medium scale are eligible for assistance in sanction when applying for an additional loan under CLCSS.
This scheme also considers export-oriented and labor-intensive sectors.
Eligibility to this scheme is not linked to any refinancing schemes of the Nodal Agencies and is not necessary to do so.
The Current 11 Nodal Agencies under CLCSS
- SIDBI (Small Industries Development Bank of India)
- NABARD (National Bank for Agriculture and Rural Development)
- SBI (State Bank of India)
- BoB (Bank of Baroda)
- PNB (Punjab National Bank)
- BOI (Bank of India)
- TIIC (Tamil Nadu Industrial Investment Corporation Limited)
- Andhra Bank
- Corporation Bank
- Canara Bank
- Indian bank
How to Apply for CLCSS
- Initially, you need to apply through your Primary Lending Institution as listed in this PDF. The completed application availing loan is uploaded by the PLI to MSME for release of funds.
- After that you can Log in with your credentials on the MSME website
- After logging in, it takes you to a welcome page with the summary of the scheme. It is recommended that you change your password. Now click on the “Apply for Subsidy” link on your left in the User Task menu to proceed.
- Fill in your basic details and continue, you’ll be provided with a detailed form one of which will be adding your requirements and the respective prices. Point 4 in Tab 3 of the form required to calculate subsidy.
- You can add multiple sectors and Equipment or Machinery, and their respective prices make sure to save and proceed further filling in your details.
- You can later visit and Edit/Modify your application if needed.
- Once submitted and reviewed if essential you’ll receive the application back for clarification from the Nodal office and requested clarification needs to be made.
- On successfully clearing both the Nodal Verifications your application will be approved for sanction of funds. Based on the availability of funds and priority level of the applicant as mentioned in the eligibility conditions.
- You can track the status or contact the respective nodal officer through the details provided on the website or using the following link
- On successful sanction, funds are transferred to the nodal agencies and further to their respective places in which the applicant has their account.
The current revised scheme provides a maximum limit for an eligible loan of Rupees 100 lakh according to the subsidy limit that would be either 15% of the total or a maximum of 15 lakh whichever is lower.
Success of CLCSS up-gradation scheme contingent of the attainability of passable working capital. Advancing institutions need guarantee that the borrowing units have made satisfactory preparations for attaining the working capital necessities.
The debtor’s security, up-front fee, and other factors must be estimated by the chief loaning agency as per its prevailing norms. In addition, Units availing subsidy under the CLCSS will not benefit any additional subsidy for technology up-gradation from the Central/State/UT Government. However, on the contrary, the Units in the North-Eastern Region can reap benefit from both simultaneously.
Finally, it is important to note that the lending agency can set conditions in order to ensure optimal management and usage of funds. This also is a key factor that affects the sanction and if it is found that the subsidy is availed with false information.