Introduction: Credit Linked Capital Subsidy Scheme

The Credit Linked Capital Subsidy Scheme is a scheme launched by the Ministry of Small Scale Industries (SSI) to help Small Scale Industries (SSI) upgrade their technology under the credit linked capital subsidy scheme (CLCSS). The Scheme intends to help SSI units, especially small businesses, in order to upgrade their technology by giving them an upfront capital incentive.

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Institutional finance (credit) was used by Khadi, village, and coir industrial units for their projects.

Their production equipment (plant and machinery) and procedures have been modernized. On institutional capital, the Scheme (pre-revised) gave a 12% capital subsidy to SSI units, including micro-units.

They used the funds to introduce well-established and upgraded technology in chosen subsectors/products that were approved under the Scheme.

A huge majority of SSI units continue to use old technology and plant & machinery due to a lack of investment and understanding of both quality requirements and access to modern technologies. The survival and growth of SSI units are crucially dependent on their modernization and technological up-gradation in the face of increased competition as a result of the economy's liberalization. Small businesses must upgrade both the manufacturing process and the corresponding plant and machinery in order to lower production costs and remain price competitive in an era when cheaper items are readily available on the global market.

What is The Requirement for Technology Upgrade?

In most cases, technology upgrade entails the introduction of state-of-the-art or near-state-of-the-art technology. Technology up-gradation would imply a significant step up from the current technology level to a significantly higher one, implying improved productivity, improved product quality, and/or improved environmental conditions, including the unit's work environment, in the varying mosaic of technology found in more than 7500 products in the Indian small scale sector. It would also entail the implementation of better packaging techniques, anti­pollution measures, and energy-saving machines. Furthermore, as this is an instance of technological up-gradation, organizations in need of adopting facilities for in-house testing and on­line quality control would be eligible for help.

Amendment in the Scheme:

In this context, the Finance Minister said in the 2004­05 Budget Speech that the ceiling for loans under the Scheme would be raised from Rs. 40 lakh to Rs. 1 crore, and the subsidy rate would be increased from 12% to 15%. In addition, based on the lessons learned from executing the Scheme, certain additional changes were necessary to make it more useful to SSI units, such as tiny, khadi, rural, and coir industrial units, in pursuing technological up-gradation on a wider scale.

Scope of the Scheme:

The scheme widely covers majorly 45 industrial sectors consisting of Small scale Industries. All the covered industrial sectors are well mentioned below who fall under the preview of this scheme

• Bio-tech Industry 
• Common Effluent Treatment Plant 
• Corrugated Boxes 
• Drugs and Pharmaceuticals 
• Dyes and Intermediates 
• Industry based on Medicinal and Aromatic plants 
• Plastic Moulded/ Extruded Products and Parts/ Components 
• Rubber Processing including Cycle/ Rickshaw Tyres 
• Food Processing (including Ice Cream manufacturing) 
• Poultry Hatchery & Cattle Feed Industry 
• Dimensional Stone Industry (excluding Quarrying and Mining) 
• Glass and Ceramic Items including Tiles 
• Leather and Leather Products including Footwear and Garments 
• Electronic equipment viz tests, measuring and assembly/ manufacturing, Industrial process control; Analytical, Medical, Electronic Consumer & Communication equipment, etc. 
• Fans & Motors Industry 
• General Light Service(GLS) lamps 
• Information Technology (Hardware) 
• Mineral Filled Sheathed Heating Elements 
• Transformer/ Electrical Stampings/ Laminations /Coils/Chokes including Solenoid coils
• Wires & Cable Industry 
• Auto Parts and Components 
• Bicycle Parts 
• Combustion Devices/ Appliances 
• Forging & Hand Tools 
• Foundries – Steel and Cast Iron 
• General Engineering Works 
• Gold Plating and Jewellery 
• Locks 
• Steel Furniture 
• Toys
• Non-¬Ferrous Foundry 
• Sport Goods 
• Cosmetics 
• Readymade Garments 
• Wooden Furniture 
• Mineral Water Bottle 
• Paints, Varnishes, Alkyds, and Alkyd products 
• Agricultural Implements and Post-Harvest Equipment 
• Beneficiation of Graphite and Phosphate 
• Khadi and Village Industries 
• Coir and Coir Products 
• Steel Re¬rolling and /or Pencil Ingot making Industries 
• Zinc Sulphate 
• Welding Electrodes 
• Sewing Machine Industry

Eligible Loan Amount:

As per the Credit Linked Capital Subsidy Scheme, the applicant can get a maximum of 100 lakh capital loan further on which he will be entitled to a subsidy of 15%, a maximum of 15 lakhs. In case a unit that has already been entitled to the benefits of the said scheme will not be eligible to claim an additional subsidy from this scheme.   

How to Apply:

With effect from October 1, 2013, an online application and tracking system has been implemented. Eligible MSEs must apply for CLCSS subsidies online through Primary Lending Institutions (PLIs), from which they obtain term loans. The PLI uploads the completed application to the connected Nodal Agency via the Online Application and Tracking System, which then proposes the application to the Office of DC (MSME) for subsidy disbursement. Following application processing and subject to funds availability, the Competent Authority grants necessary permission with the cooperation of the Internal Finance Wing, after which monies are given to Nodal Agencies. The funds are subsequently transferred from the Nodal Agencies to the PLIs, where the MSE's account is managed.

Subsidy Released:

The below figures depict the total subsidy released from the date of the implementation of this scheme.