CLCSS Scheme
CLCSS: Credit Linked Capital Subsidy Scheme
Large percentage of Small Scale Industry (SSI) units still work with outdated technology and plant and machinery. Seeing upon the issue, the Ministry of Micro, Small and Medium Enterprises (MoMSME) launched a subsidy scheme, ‘Credit Linked Capital Subsidy (CLCSS) for technology upgradation of Micro and Small Enterprises (MSEs).
What is a CLSS Scheme?
Credit Linked Subsidy Scheme 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 the scheme is to upgrade the plant and machinery of enterprises with state-of-art-technology, business expansion. Besides existing MSMEs, new enterprises which have been set up as per CLCSS guidelines can qualify as beneficiaries of this scheme.
Table of Contents
Objectives of CLCSS
The objectives of CLCSS are as follows:
- To give technology advances through equipment to MSMEs.
- To upgrade MSMEs plant and machinery with the most recent technological advancements.
- To assist in expansion if needed.
Also Read: MSME Advantages and Disadvantages
Features of CLCSS
Some of the features of CLCSS are as follows:
- Businesses can receive up to 15% subsidy on their investment in specific machinery under this scheme. Additionally, the subsidy comes with an upper limit of Rs 1 crore.
- CLCSS scheme is available to those enterprises which have to 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 loans under CLCSS are also entitled to benefit from the subsidy scheme.
- According to the revised CLCSS 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 Scheme, they are:
- Bank of India
- State Bank of India
- Indian Bank
- Bank of Baroda
- Andhra Bank
- Punjab National Bank
- Corporation Bank
- Canara Bank
- State Bank of Bikaner and Jaipur
- Tamil Nadu Industrial Investment Corporation Limited
- Small Industries Development Bank of India (SIDBI)
- National Bank for Agriculture and Rural Development (NABARD)
Also Read: What is CGTMSE Scheme?
Benefits of CLCSS
The CLCSS scheme encourages firms to grow, upgrade and unleash their potential in various ways:
- By introducing this scheme, many non-productive industries were improved.
- Helps boost the growth and expansion of industries situated in rural and semi-urban areas enterprises.
- 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.
- Proves useful in upgrading the standard of technology used in the production process.
- Enables enterprises to manufacture products of superior quality.
List of Approved Sub-sectors/Products
| Drugs and Pharmaceuticals | Mineral Water Bottle | Transformer/ Electrical Stampings/ Laminations/ Coils/ Chokes including Solenoid coils | Industry based on Medicinal and Aromatic plants |
| Glass and Ceramic items including tiles | Toys | Mineral Filled Sheathed Heating Elements | Glass and Ceramic items, including tiles |
| Biotech Industry | Steel Furniture | Control, Analytical, Medical, Electronic Consumer & Communication equipment, etc | Information Technology (Hardware) |
| Food Processing | Readymade Garments | Forging & Hand Tools Foundries – Steel and Cast Iron | Plastic Moulded/ Extruded Products and Parts/ Components |
| Wooden Furniture | Wires & Cable Industry | Combustion Devices/ Applications | Non-Ferrous Foundry |
| Rubber Processing including Cycle/Rickshaw | Steel Re-rolling or Pencil Ingot Making Industries | Khadi and Village Industries | Sewing Machine Industry |
| Machine Tool | Agricultural Implements and Post-Harvest Equipment | Paints, Varnishes, Alkyds and Alkyd products | Locks |
| Cosmetics | Sports Goods | Electronic equipment via test, measuring and assembly/ manufacturing, Industrial process | Welding Electrodes |
| Fans & Motors Industry | Agricultural Implements and Post-Harvest Equipment | General Light Service Lamps | Dimensional Stone Industry (excluding Quarrying and Mining) |
| Dyes and Intermediates | Beneficiation of Graphite and Phosphate | Common Effluent Treatment Plant | Corrugated Boxes |
| Printing Industry | General Engineering, Gold Plating and Jewellery | Leather & Leather Products including Footwear and Garments | Coir and Coir Products |
| Zinc Sulphate | Poultry Hatchery & Cattle Feed Industry | Bicycle Parts | Industrial Gases |
Documents Required to Avail Credit Linked Capital Subsidy Scheme
Documents that are required to be submitted to back up their eligibility and also to initiate the verification process:
- Aadhaar Card / Voter ID / PAN Card
- KYC documents of the applicant
- Business Address and Vintage Proofs
- Any other document required by the lender
- Recent passport size photographs.
Also Read: Business Loan eligibility criteria in India
List of Beneficiaries (CLCSS)
- Andhra Bank
- Bank of Baroda
- Bank of India
- Canara Bank
- Corporation Bank
- Indian Bank
- NABARD
- Punjab National Bank
- SIDBI
- State Bank of India
- Tamil Nadu Industrial Investment Corporation
Claim Subsidy under CLCSS
To avail or claim a subsidy under CLCSS, you need to apply online via Primary Lending Institutions (PLIs) from where the Micro and Small Enterprises (MSEs) avail term loans.
The process to claim for subsidy under CLCSS are follows:
- Apply online through a Primary Lending Institution (PLI)
- The PLI will upload the application to the Nodal Agency
- The Nodal Agency will recommend the application to the Office of DC (MSME)
- The Competent Authority will approve the application, subject to availability of funds
- The Nodal Agency will receive the funds and transfer them to the PLI
- The PLI will transfer the funds to the MSEs account.
The status of the application can be tracked online or by contacting the concerned nodal officer.
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: Go to the official MSME website and Login using the User ID and Password
Step 3: Click on ‘Apply for Subsidy’ Link on the User Task menu
Step 4: Provide necessary details to proceed
Step 5: Complete the form by entering details about the machinery or equipment
Step 6: Review the detailed information and submit the form for processing
Once the form is submitted, it will be reviewed after which individuals will receive the application back for verification. Post verification, 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. Once sanctioned, the funds are transferred to the designated nodal agency and will subsequently be disbursed to the financial institution where the applicant holds an account.
FAQs
The ceiling on the subsidy would be Rs 15 lakh or 15% of the investment in eligible plants and machinery, whichever is lower.
The full form of CLCSS is Credit Linked Capital Subsidy Scheme.
The lock-in period for the Credit Linked Capital Subsidy scheme (CLCSS) is three years. This means that the beneficiary unit must remain in commercial production for a minimum of three years after the eligible plant and machinery is installed.
The Credit Linked Capital Subsidy Scheme (CLCSS) applies to small and micro enterprises (MSEs) in the following industries: Tiny industrial units, Khadi Industrial Units, Village industrial units and Coir industrial units.
The CLCSS is a subsidy scheme that helps MSEs upgrade technology and modernise their production processes. The scheme is open to both new and existing enterprises, and also to MSEs based in rural and semi-rural areas.
The Credit Linked Capital Subsidy Scheme covers technology upgrades that helps micro and small enterprises (MSEs) upgrade their plant and machinery with state-of-the-art technology. The scheme covers a range of industries, including: Biotech, Food Processing, Medicinal and aromatic plants, Drugs and Pharmaceuticals, etc.
The CLCSS component of CLCS-TU scheme was in force till 31 March 2020.
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.
Subsidy is being released to the concerned Nodal bank and subsidy is to be kept in the form of Term Deposit Receipt (TDR) for 3 years by bank after the release by Office of DC (MSME) in the concerned unit account and interest amount on the term loan should be reduced accordingly. The beneficiary unit shall remain in commercial production for a period of at least three years after the installation of the eligible plant and machinery on which subsidy under CLCSS has been availed. If the unit fulfils the condition, the TDR will be transferred to the unit’s account after three years.
Moreover, it is to clarify that there are two different conditions one is about the commercial production for a period of at least three years after installation of the eligible plant and machinery on which the subsidy under CLCSS has been availed and another is that Subsidy is to be kept in the form of TDR for 3 years. These two conditions and other conditions stipulated in the extant guidelines are to be fulfilled by the beneficiary/PLIs before the release of subsidy in the beneficiary’s account.
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