written by | June 7, 2022

Everything You Need to Know About CLCSS Scheme

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The Credit linked capital subsidy scheme (CLCSS) and the Technology Upgradation theme (CLCS-TUS) for Small and Medium Enterprises (MSEs) are devised by the government. The Credit connected Capital grant theme, or CLCSS, intends to assist SSI units.

Due to scarcity of investment and awareness of quality criteria, several SSI units still use obsolete technology, machinery and equipment. Due to competition, the enlargement and development of SSI units rely on improvement and technical improvement. Small corporations should prioritise improving their production processes so that their sales are skyrocketing with premium quality. 

Do you know?

The Credit Linked Capital Subsidy Scheme intends to benefit MSME and SSI firms such as khadi, rural, industrial coir, and micro-enterprises from technical improvement by offering capital subsidies. Infrastructure and machinery upgrades will improve the industry's competitiveness, allowing it to offer lower-cost goods and services.

 

What Is a Credit Linked Capital Subsidy Scheme?

The Credit Linked Capital Subsidy Scheme (CLCSS) is run by the Ministry of Small Scale Industries (SSI) to help small businesses upgrade their equipment. The Scheme aims to assist SSI units, such as small, khadi, rural, and coir industrial units, in modernising their production equipment by providing upfront capital subsidies on financial institutions (credit) (plant and machinery). The Scheme offered SSI units, including micro-units, a 15% capital subsidy on institutional investment to introduce well-established and upgraded technology in defined sub-sectors/products recognised by the Scheme.

CLCSS Scheme Benefits for Technology Upgradation

A technology upgrade entails transitioning from present technology to cutting-edge technology beneficial for productivity, improving conditions for the environment, improving product quality, and improving work done around the unit. Below are the pros of the CLCSS Scheme:

  • It helps upgrade the technology of small-scale industries that belong to different products/sectors as covered in the MSME Ministry. 
  • It provides a 15% subsidy for purchasing plant equipment & machinery. This helps in decreasing the loan burdens of small micro and enterprises. 
  • It supports the growth of rural industries by providing them with enough capital to manufacture high-quality products. 

CLCSS can help you upgrade your small-scale industry's equipment and machinery. Opt for the CLCSS's subsidies to modernise your plant's equipment and machinery. Before applying for a term loan, ensure that the CLCSS program covers your principal lending from the institution. 

Also Read: What is Subsidy - Learn About Benefits of Subsidy for Business, Types of Subsidies, & How Subsidy Implemented

Eligibility For CLCSS

  • The scheme's capital subsidy of 15% on qualified plants and machinery will be available only for projects that have been approved for term loans by an eligible PLI.
  • Industries that are transitioning from small-scale to medium-scale because of the sanction of an additional loan under the CLCSS scheme are also eligible for assistance.
  • The scheme's capital subsidy eligibility is unrelated to any refinancing scheme for nodal agencies.
  • This plan will consider new export-oriented and labour-intensive sectors/activities.

How Can I Apply for the CLCSS Scheme?

An online application and monitoring system was established in 2013. Eligible MSMEs can apply online for subsidies under the Credit Linked Capital Subsidy Scheme through PLIs (Primary Lending of Institutions) from which they acquire term loans. The PLI submits an online application and keeps an eye on the system to the linked agency for nodals, which forwards the application to the Office mode to DC for subsidy payout. Following the processing of the application and the availability of money, with the IFW full form (Internal Finance Wing), the CA (Competent Authority) gives authorisation, and monies are allocated to the Nodal Agencies.

Documents Required For CLCSS Scheme

  • Aadhar card / PAN card / Voter ID 
  • Address proof
  • Business proof
  • Recent photographs
  • KYC documents

Some of the Industries and Products that Potentially Profit from  the CLCSS Scheme Include

Industries

  • Dyes and intermediates
  • Food preparation; Corrugated boxes;
  • Rubber processing, particularly bicycle and rickshaw tyres;
  • Biotechnology industry;
  • Pharmaceuticals and medications;
  • Plant for Effluent common Treatment; Cattle Feed Poultry Hatchery and Industry;
  • Industry based on aromatic and therapeutic plants;
  • Products, components or parts made of plastic that have been moulded or extruded

Products

  • Glass and Ceramic Items, including tiles
  • Toys
  • Mineral Filled Sheathed Heating Elements
  • Food Processing (including Ice Cream manufacturing)
  • Readymade Garments
  • Steel Furniture
  • Control, Analytical, Medical, Electronic Consumer and Communication equipment
  • Forging & Hand Tools Foundries – Steel and Cast Iron
  • Wires & Cables
  • Auto Parts and Components
  • Wooden Furniture
  • Sewing Machine
  • Locks
  • Cosmetics
  • Sports equipment
  • Welding Electrodes

Credit Linked Capital Subsidy Scheme Nodal Agencies and Banks

The SIDBI (Small Industries Development Bank of India) and the NABARD executed the CLCSS subsidy (National Bank for Agriculture and Rural Development). National Small Industries Corporation Limited, Canara Bank, Andhra Bank, State Bank of India (SBI), and Bank of Baroda were the nine public sector banks and government institutions chosen as nodal agencies or banks for the scheme's execution.

Eligible Beneficiaries 

  1. Subsidies are accessible for brand new units registered with the State Board of Industries and have the relevant technology verified by GTAB or TSC.
  2. Units that are presently registered with the State Board of Industries are eligible to use for SSI sector upgrade.
  3. In the SSI sector, partnerships, public and personal restricted companies, co-operative societies, and individual proprietors and all eligible.
  4. The machinery non-inheritable underneath the NSIC's purchase theme for hiring was eligible, as were export-related operations with a high labour intensity.
  5. The priority is given to women entrepreneurs.

Eligible Primary Lending Institutions

  • Scheduled Commercial Banks
  • SFCs or State Finance Corporations
  • Scheduled Co-operative Banks
  • NEFDI or North Eastern Development Financial Institution
  • RRBs or Regional Rural Banks

The Procedure For Requesting For CLCSS

  • The CLCSS has had an online application and tracking system since 2013. Eligible borrowers must apply for the CLCSS subsidy at Primary Lending Institutions (PLIs), where they have taken out term loans.
  • The recipient will be asked to complete an application form provided by the PLI. The PLI uploads the completed application to the internet portal. The linked nodal agency receives the submitted application and recommends it to the Office of DC (MSME).
  • The DC (MSME) office approves the subsidy disbursement following verification. The IFW delivers the monies to the Nodal Agencies when all requisite verifications have been completed.

Also Read: Small Scale Industries in India (SSI) - Registration, Types, Advantages & More

The CLCSS's Highlights

  • Businesses can get up to a 15% subsidy on qualified machinery investment under the CLCSS scheme (up to a maximum of 1 crore).
  • Only enterprises that have invested in qualified plant machinery utilising term loans from the pre-approved list of PLIs are eligible for the 15% incentive (Public Lending Institutions).
  • The subsidy is also available to industries transitioning from small to medium scale due to extra loans under the CLCSS scheme.

Conclusion

The system (pre-advised) provides a 12% capital subsidy to SSI units and small businesses on institutional financing (credit) that is used to introduce well-established and enhanced technology in authorised sub-products/sectors under the Credit Linked Capital Subsidy Scheme. The pre-revised program assessed the qualifying amount of subsidy based on a loan amount not exceeding ₹40 lakhs.

The Ministry of Micro, Small, and Medium Enterprises (M/o MSME) has launched a subsidy plan called Credit Linked Capital Subsidy Scheme (CLCSS full form) to help Micro and Small Enterprises (MSEs) upgrade their technology. This scheme's main goal is to help Small Scale Industries (SSI) expand and flourish in rural and urban regions.
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FAQs

Q: How can I apply for a CLCSS subsidy?

Ans:

Eligible MSEs must apply for CLCSS subsidy online through Primary Lending Institutions (PLIs), from which they obtain term loans.

Q: How does the CLSS scheme assist me?

Ans:

Individuals must fall into one of the following income groups to be eligible for CLSS benefits:

  • Lower Income Group or Economically Weaker Section - Annual income  between ₹3 lakhs and ₹6 lakhs.
  • Middle Income Group I consists of people having a total income of between ₹6 lakhs and ₹12 lakhs.
  • Middle Income Group II consists of people having a total income of between ₹12 lakhs. 

Q: How does a credit-linked subsidy work?

Ans:

The special Credit Linked Subsidy Scheme (CLSS) is Beneficial under the Pradhan Mantri Awas Yojana, which aims to assist India's Lower-Income Groups, Middle-Income Groups, and Economically Weaker Sections by offering an interest discount on house loan EMIs of over 2,000 every month.

Q: What is a CLSS scheme for MSME?

Ans:

The Scheme intends to assist SSI units, such as micro-units, khadi units, village units, and coir industrial units, modernising their production process and activity by giving upfront Capital Subsidies.

Q: When did the Government of India start the credit-linked capital subsidy, plan Class?

Ans:

The Government of India created the Credit Linked Capital Subsidy Scheme (CLCSS) for SSI Technology Upgradation in 2000-01 to facilitate technology upgradation by SSI enterprises in the selected goods / sub-sectors by giving capital subsidies for the introduction of proven technologies.

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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.