Credit Linked Capital Subsidy Scheme (CLCSS)

Technology plays a significant role in the success of small enterprises and particularly in the manufacturing sector. Micro, small and medium enterprises (MSMEs) need to invest heavily in equipment and machinery for creating products that meet national and global standards.

As the cost of the required machinery amounts to a substantial value, it becomes challenging for these enterprises to generate the capital for investment. This is where the Credit Linked Capital Subsidy Scheme (CLCSS) comes into the picture.

Below is a detailed account of this scheme illustrating all vital aspects that include tracking the status of CLCSS.

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What Is CLCSS?

To upgrade the technology of SSIs or Small Scale Industries, the Ministry of Small Scale Industries operates a scheme known as Credit Linked Capital Subsidy Scheme (CLCSS). The Government of India launched it on 1st October 2000.

Several Indian small-scale industries still work by using outdated technology, and they cannot upgrade their machinery because of the non-availability of funds. This scheme aims to facilitate technology up-gradation by extending upfront capital subsidies to the units of Small Scale Industries, that have availed of institutional credit to modernise their equipment and techniques of production. These units include khadi, coir industrial units, etc.

What Are the Features of CLCSS?

Illustrated below are some noteworthy features of the CLCSS for technology upgradation:

CLCSS aims to provide a 15% upfront capital subsidy up to a maximum cap of ₹15 lakhs, which implies that the maximum investment in approved machinery is ₹1 crore. It also includes installing energy conservation machinery, anti-pollution measures, improved packaging techniques, online quality control and in-house testing.
CLCSS is available for enterprises that have allocated funds in machinery by availing a term loan via the approved list of financial institutions.
Industries that are transitioning to medium scale from small scale by availing a loan under CLCSS can avail benefits from this scheme.
Presently, CLCSS offers subsidies to 51 products or sub-sectors that include village and khadi industries.
At present, there are 12 nodal banks or agencies that implement CLCSS. These include National Bank for Agriculture and Rural Development or NABARD, Bank of India, State Bank of India, Indian Bank, Bank of Baroda, Andhra Bank, Punjab National Bank, Corporation Bank, Canara Bank, Tamil Nadu Industrial Investment Corporation Limited, State Bank of Bikaner and Jaipur, and Small Industries Development Bank of India or SIDBI.
All agencies or nodal banks except NABARD and SIDBI will only consider proposals for credit that their respective branches have approved. For other PLI (Primary Lending Institutions) approved under the existing guidelines, NABARD and SIDBI will act as the nodal agencies to release subsidies under this scheme.
Ever since 1st October 2013, individuals can avail of an online system to apply and track their application status. In this regard, the SME units have to submit their application for subsidy claims through their Primary Lending Institutions.

Who Are Eligible for CLCSS?

The below-mentioned details highlight the eligibility criteria to become a beneficiary under CLCSS:

The small and micro enterprises belonging to the sub-sectors specified by the Ministry of MSME are deemed eligible for CLCSS.
Both existing and new enterprises can avail subsidies under CLCSS.
Small and micro-enterprises situated in rural and semi-urban regions with a valid UAM number are eligible.
As per CLCSS guidelines, some approved sectors and sub-sectors that can benefit from this scheme include:
- Food Processing (including ice cream manufacturing)
- Corrugated Boxes
- Common Effluent Treatment Plant
- Poultry Hatchery and Cattle Feed Industry
- Dyes and Intermediates
- Industry based on Medicinal and Aromatic Plants
- Plastic Moulded Or Extruded Products And Parts/ Components
- Biotech Industry
- Drugs And Pharmaceuticals
- Rubber Processing including tyres or cycle or rickshaw.

What Are the Benefits of CLCSS?

By availing of the CLCSS, small scale industries can benefit in a number of ways. Given below are some benefits of CLCSS:

Enables enterprises to manufacture high-quality products in substantial quantities.
Helps in the up-gradation of the standard of technology which is useful for the production process.
The subsidy from CLCSS provided for purchasing eligible equipment and machinery helps lower the overall loan burden of the MSME to a significant extent.
Acts as a potent means for boosting the expansion and growth of industries located in semi-urban and rural areas.

How Can Individuals Avail the CLCSS?

CLCSS is associated with term loans availed by the MSEs from financial institutions. In order to claim subsidy under this scheme, eligible MSEs must apply online through Primary Lending Institutions (PLIs), from where they have availed term loans.

Read on to know the application procedure of this scheme and information on how to track CLCSS application.

Step 1

Login with your User ID and password on the official web portal of MSME and select ‘Apply for Subsidy’ on the User Task menu.

Step 2

Provide all required details to continue and fill the form by inputting details about equipment or machinery.

Step 3

Verify all entered details and submit the form.

How Can You Track Your CLCSS Application Status?

You can track your application status for CLCSS either online or by contacting the concerned nodal officer.

The competent authority and concurrence of the Internal Finance Wing grants approval after processing of the application and if funds are available. Following this, funds get released to the nodal agencies, which then transfer the same to the Primary Lending Institutions where the MSE holds its account.

All owners of SSI units who are willing to avail CLCSS must keep in mind the details mentioned above. Besides these, they must also take note of the various documents required to avail this scheme.

Frequently Asked Questions

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Is CLCSS applicable for medium and large-scale enterprises?

No. Presently, CLCSS is available only for Small Scale Industries (SSIs) or all industries that have recently transitioned or upgraded themselves from small scale to medium scale.

Can the lending agency set conditions to ensure that the funds are utilised for optimal management?

Yes. The lending agency can also revoke the sanction of funds in case an applicant furnishes false information.