Credit Linked Capital Subsidy Scheme (CLCSS)

Introduction:
A large percentage of Micro & Small Enterprises (MSEs) continue with outdated technology and plant & machinery. Due to insufficient investment and lack of awareness of both the quality standards and access to modern technologies, With increasing competition due to liberalization of the economy, the survival and growth of the MSMEs are critically dependent on their modernization and technological up-gradation. Up-gradation of both the process of manufacture and corresponding plant and machinery is necessary for the small enterprises
to reduce the cost of production and remain price competitive at a time when cheaper products are easily available in the global market.

Objective:
With the objective of assisting MSMEs in technology up-gradation, Ministry of MSME operates a Scheme for technology up-gradation of MSEs, called the Credit Linked Capital Subsidy Scheme (CLCSS). The Scheme aims at facilitating technology up-gradation by providing upfront capital subsidy to MSEs, including tiny, khadi, village and coir industrial units, on institutional finance (credit) availed of by them for modernization of their production equipment (plant and machinery) and techniques.

The Scheme:
Facilitate Technology Up-gradation of SSI units in the specified products / sub-sectors by providing 15% capital subsidy for induction of well established and improved technologies. CLCSS provides 15 percent upfront capital subsidy to MSEs on institutional finance availed of by them for induction of well established and improved technologies in the specified sub-sectors/products approved under the Scheme. Maximum limit of eligible loan under CLCSS Scheme is Rs. 100 lakhs. Ceiling on subsidy would be Rs.15 lakhs or 15% of investment on eligible Plant & Machinery, whichever is lower.

Technology up-gradation:

Definition:
Technology up-gradation would ordinarily mean induction of state-of-the-art or near state-of-the-art technology. In the varying mosaic of technology obtaining in more than 7500 products in the Indian small scale sector, technology up-gradation would mean a significant step up from the present technology level to a substantially higher one involving improved productivity, and/or improvement in the quality of products and/or improved environmental conditions. Note: Replacement of existing equipment/technology with the same equipment/ technology will not qualify for subsidy under this scheme, nor would the scheme be applicable to units upgrading with second hand machinery

Eligible beneficiaries:

  1. Existing MSEs with EM Part II, who upgrade their existing Plant and Machinery with state-of-the-art technology, with or without expansion
  2. New MSEs with EM registration, which have set up their facilities only with appropriate eligible and proven technology duly approved by the Governing Technology Approval Board (GTAB), or Technical Sub Committee (TSC) of the CLCSS.
  3. The units may be sole Proprietorship, Partnerships, Co-operative Societies, Private and Public limited companies in the MSE sector.
  4. Priority is given to women entrepreneurs.

Eligibility criteria:

  1. The scheme is applicable only to those units to whom term loans have been sanctioned by eligible banks on or after September 29, 2005. Machinery purchased under Hire Purchase scheme of NSIC is also eligible.
  2. If, on account of sanction of additional loan under CLCSS, an industry graduates from small scale to medium scale, it is still eligible for subsidy.
  3. It is not necessary for the bank sanctioning loan under CLCSS to seek refinance in respect of term loan sanctioned by it, from refinancing agencies
  4. Mere replacement of existing equipment / technology with same equipment/technology will not qualify for subsidy under this scheme.
  5. The claim sent through the co-opted PLIs of SIDBI, should reach SIDBI within the specified date of the next quarter in which the last disbursement for purchase of eligible plant and machinery has taken place

Other conditions:

  1. Equity of the promoter, Debt Equity ratio, up-front fee, security etc is determined by the lending agency, as per existing norms.
  2. Units availing subsidy under this scheme shall not avail subsidy for technology up-gradation from any Central/State/UT scheme. (only National Equity Fund scheme exempted)
  3. The cost of equipments such as tools, jigs, dies, moulds, the cost of generation sets, fire fighting equipment. Spare parts, Consumables etc. for maintenance and the cost of installation, the cost of research & development equipment and pollution control equipment, extra transformer, the bank charges and service charges, cost of installation of cables, wiring, bus bars, electrical control panels , oil circuit breakers or miniature circuit breakers, the cost of gas producer plants, transportation charges for indigenous machinery, technical know-how for erection of plant & machinery, cost of such storage tanks which store raw materials, finished products only and are not linked with the manufacturing process; etc shall be included while calculating value of Plant & Machinery.
  4. Both the SIDBI and the NABARD shall have the right to inspect the books of eligible PLI and the loan accounts irrespective of whether refinance is availed or not from the Nodal Agency (ies) under this Scheme and/ or call for any other information as may be required by GOI from time to time. The beneficiary unit shall remain in commercial production for a period of at least three years after installation of eligible plant and machinery on which subsidy under CLCSS has been availed.
  5. The following items are not eligible to claim CLCSS subsidy Tools, Spare Parts, jigs, dies, Consumables, Moulds, installation & Erection Charges, R & D & Pollution Control, Fire fighting equipments , Cables, Wiring, Bus Bars, Anglers, Electrical control panels, Oil or miniature circuit breakers, Transformers, Gas producer plants, Local Transportation (other than Ocean) Technical know-how , bank charges and service charges, Cost of Storage tanks which store raw materials, finished products and items not linked with the manufacturing process.

Monitoring of the Scheme:
The Scheme is monitored by the Governing & Technology Approval Board (GTAB) of the CLCSS. Secretary (MSME), Ministry of MSME, Govt of India is the Chairperson of the Board.

Scope of the Scheme (List of Industries /Activities coming under this Scheme):

  1. Bio – tech industry
  2. Common Effluent Treatment Plan.
  3. Corrugated Boxes
  4. Drugs & Pharmaceuticals – including machinery for Schedule M compliance
  5. Dyes and intermediates
  6. Medicinal & Aromatic plants based industry
  7. Plastic Moulded / Extruded Products and Parts / Components
  8. Rubber Processing including Cycle / Rickshaw tyres
  9. Food processing (Rice Mill, Pickles, Bakery, Ice Cream, Cashew etc.
  10. Poultry Hatchery/Cattle feed
  11. Dimensional stone industry (excluding quarrying & mining)
  12. Glass & Ceramic, Tiles etc.,
  13. Leather / leather products incl, footwear & garments
  14. Electronic equipment
  15. Fans & Motor Industry
  16. GLS Lamps
  17. Information Technology (Hardware)
  18. Mineral Filled sheath heating elements
  19. Transformer/Electrical stampings / Laminations / Coils / Chokes etc.
  20. Wires and cables
  21. Auto parts and components
  22. Bicycle parts
  23. Combustion Devices/appliances
  24. Forging & Hand Tools
  25. Foundries/ Steel and Cast Iron
  26. General Engineering Works
  27. Gold Plating & Jewellery
  28. Locks
  29. Steel Furniture
  30. Toys
  31. Non ferrous foundry
  32. Sports Goods
  33. Cosmetics,
  34. Readymade Garments
  35. Wooden furniture
  36. Mineral Water Bottle
  37. Paints, Varnishes, Alkyds & alkyd products
  38. Agricultural Implements & Post Harvest Equipment
  39. Beneficiation of Graphite and Phosphate
  40. Khadi & Village Industries (Oil Industry, Jaggery, Pulses, Cereals, Dal, flour Mill,
    Spices,Brick, Rural Engg, Fabrication, Paper, Electronics, fiber, etc.,)
  41. Coir & Coir Products
  42. Steel Re-rolling & Pencil ingot making
  43. Zinc sulphate
  44. Welding electrodes
  45. Sewing Machine Industry
  46. Industrial gases
  47. Printing Industry
  48. Machine tools
  49. Copper strip industry
  50. Ferric & Non Ferric Alum
  51. Pesticides Formulation