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Credit Linked Capital Subsidy Scheme or CLCSS for technology upgradation was launched in October 2000 by the Government of India. The said scheme is directed towards MSMEs to help them improve their technology for optimising revenue generation. However, to become a beneficiary of this scheme, individuals need to meet specific eligibility criteria, among other requirements.

With that being said, let’s find out more about CLCSS and its requirements.

What is a Credit Linked Capital Subsidy Scheme?

MSMEs in India are often forced to work with obsolete technology due to shortage of funds. However, this innovative credit scheme functions to help MSMEs located in rural and semi-urban areas improve their existing technology and equipment.

CLCSS was introduced by the Ministry of Micro, Small and Medium Enterprises to boost production of small scale industries by providing them access to subsidised capital. Under this scheme, eligible enterprises can enjoy a capital subsidy of 15% on loan availed from a financial institution.

The primary objectives of this scheme can be described as the intention to upgrade the plant and machinery of enterprises with state-of-art technology, irrespective of expansion. Besides existing MSMEs, new enterprises which have set up as per CLCSS guidelines can qualify as beneficiaries of this scheme.

Features of CLCSS

These are among the most noteworthy characteristics of CLCSS subsidy –

  • Businesses can receive up to 15% subsidy on their investment in specific machinery under this scheme. It must be noted that the subsidy comes with an upper limit of Rs.1 crore.
  • CLCSS scheme is available to those enterprises which have put their money in machinery by availing a term loan from the approved list of financial institutions.
  • Industries that are transitioning from small to medium scale by availing loan under CLCSS are also entitled to benefit from this subsidy scheme.
  • According to the revised CLSS scheme, an extra 10% subsidy is extended to entrepreneurs who belong to the SC/ST category and hail from the selected districts of the North-East or other hilly terrains.
  • 12 nodal agencies oversee Credit Linked Capital Subsidy Schemes. They are –
  1. Bank of India
  2. State Bank of India
  3. Indian bank
  4. Bank of Baroda
  5. Andhra Bank
  6. Punjab National Bank
  7. Corporation Bank
  8. Canara Bank
  9. State Bank of Bikaner and Jaipur
  10. Tamil Nadu Industrial Investment Corporation Limited
  11. Small Industries Development Bank of India or SIDBI
  12. National Bank for Agriculture and Rural Development or NABARD

Benefits of Credit Linked Capital Subsidy Scheme

By availing the Credit Linked Capital Subsidy Scheme, small scale industries can benefit in these following ways –

  • Proves useful in upgrading the standard of technology used in the production process.
  • The subsidy extended on the purchase of eligible machinery and equipment comes in handy for reducing the overall loan burden of the MSME to a considerable extent.
  • It serves as a potent means to boost the growth and expansion of industries situated in rural and semi-urban areas.
  • Allows enterprises to manufacture high quality and quantity of products.

Eligibility Criteria for CLCSS

These pointers highlight the eligibility criteria for becoming a beneficiary under CLCSS –

  • Small and micro-enterprises that belong to -sub-sectors specified by the Ministry of MSME will be deemed eligible for this subsidy scheme.
  • Both new and existing enterprises can avail subsidy under this scheme.
  • Small and micro-enterprises based in semi-urban and rural areas with a valid UAM number are also eligible.
  • Typically, the enterprises include – sole-proprietorship, private limited companies, tiny industries, khadi, coir units, partnerships, village industries, etc.

This table highlights some approved sectors and sub-sectors that come under CLCSS scheme –

Biotech IndustryCommon Effluent Treatment PlantDrugs and PharmaceuticalsFood ProcessingRubber ProcessingWires & Cable Industry
Corrugated BoxesDyes and IntermediatesIndustry based on Aromatic and Medicinal plantsPlastic Moulded or Extruded Products and PartsPoultry Hatchery and Cattle Feed IndustryBicycle Parts
Dimensional Stone IndustryLeather and Leather ProductsInformation TechnologyGlass and Ceramic Items including TileFans & Motors IndustryForging and Hand Tools
Gold Plating and JewelleryToysSteel FurnitureCosmeticsAgricultural Implements and equipmentSewing Machine Industry
Coir and Coir ProductsCopper Strip IndustryKhadi and Village IndustriesWelding ElectrodesPesticides FormulationPrinting Industry

Documents Required to Avail Credit Linked Capital Subsidy Scheme

Eligible entities are required to submit a set of documents to back up their eligibility and also to initiate the verification process –

  • Identity proof
  • Proof of business address
  • Address proof of applicants
  • Proof of business
  • PAN card of the applicant and company in question
  • Recent passport size photographs

Other than these, applicants may be required to submit other KYC documents to become a beneficiary of the Credit Linked Capital Subsidy Scheme.

Steps to Apply for CLCSS

By completing these steps, one can apply for the CLCSS scheme successfully –

Step 1 – Apply via a listed financial institution.

Step 2 – Login with User ID and password on MSME’s official website.

Step 3 – Click on ‘Apply for Subsidy’ Link on the User Task menu.

Step 4 – Provide necessary details to continue.

Step 5 – Fill the form by entering details about the machinery or equipment.

Step 6 – Verify the details shared and submit the form.

Once the form is submitted, it will be reviewed after which individuals will receive the application back for clarification. Post clarification, the nodal verification of the said application will be forwarded for loan sanction based on applicant’s eligibility, urgency level and availability of funds.

Applicants can track the status of their application online or by contacting the concerned nodal officer. On sanction, the funds are transferred to the designated nodal agency and will subsequently be disbursed to the financial institution where the applicant holds an account.

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