Special Credit Linked Capital Subsidy Scheme (SCLCSS) for SC/ST Micro & Small Enterprises
The scheme aims at facilitating purchase of plant & machinery by providing 25 per cent upfront capital subsidy to the existing as well as new SC/ST owned MSEs on institutional finance availed of by them. The objective of this scheme is to promote new enterprises and support the existing enterprises in their expansion for enhanced participation in the public procurement.
Scope of the Scheme:
- The scheme would cover existing SC/ST MSEs for up-gradation or expansion as well as new SC/ST MSEs.
- The scheme would cover purchase of all plants & machinery without any restriction on the technologies but subject to Consent/NOC from Pollution Control Board.
- Industries covered under RED category as per the Classification of industries for consent management (Schedule- VIII, rules 3(2) and 12 of Ministry of Environment & Forests, Govt. of India) shall not be eligible for subsidy under above scheme.
- The scheme shall be applicable only for the purchase of Plant & Machinery eligible for Term Loan from the Prime Lending Institutions (PLIs).
- This scheme shall be applicable to the eligible enterprises where term loan has been sanctioned by the PLIs on or after the date of notification of the scheme.
Sole Proprietorships, Partnerships, Co-operative societies, Private and Public limited companies owned by SC/ST Entrepreneurs of MSE sector engaged in the manufacturing activities are eligible for seeking assistance under this scheme. The existing enterprises should have obtained registration under Udyog Aadhaar Memorandum as well as have enrolled in the MSME Data Bank
Definition of SC/ST Enterprises:
- In case of proprietary MSE, proprietor shall be SC/ST
- In case of partnership MSE, the SC/ST partners shall be holding at least 51% shares in the unit
- In case of private limited companies, at least 51% shares shall be held by SC/ST promoters.
The implementing agency would be Office of DC (MSME).
The Nodal Agencies approved for CLCSS scheme would act as Nodal Agencies for SCLCSS also. Accordingly, Small Industries Development Bank of India (SIDBI), National Bank for Agriculture and Rural Development (NABARD) and below mentioned banks will act as nodal banks/agencies for implementation and release of capital subsidy under the scheme:
- State Bank of India
- Canara Bank
- Bank of Baroda
- Punjab National Bank
- Bank of India
- Andhra Bank
- State Bank of Bikaner & Jaipur
- Tamil Nadu Industrial Investment Corporation
The above banks would consider proposals only in respect of credit approved by their respective branches, whereas, for other Primary Lending Institutions (PLI), the SIDBI and the NABARD would be the nodal agencies for release of subsidy under this scheme.
Primary Lending Institutions (PLI)
All Scheduled Commercial Banks, Scheduled Cooperative Banks [including the urban cooperative banks co-opted by the SIDBI under the Technological Up-gradation Fund Scheme (TUFS) of the Ministry of Textiles], Regional Rural Banks (RRBs), State Financial Corporation’s (SFCs) and North Eastern Development Financial Institution (NEDFI) are eligible as PLI under this scheme after they execute a General Agreement (GA) with either of the nodal agencies i.e. SIDBI or NABARD. Details of eligible Scheduled Commercial Banks, SFC, Cooperative Banks [including urban cooperative banks co-opted by the SIDBI under the Technological Up-gradation Fund Scheme(TUFS) of the Ministry of Textiles]/ and RRBs under this scheme are provided at Appendix-A. This scheme shall also be implemented through other Nodal agencies notified from time to time by Ministry of MSME. Nomination of Nodal Agencies will be a continuous process.
- Capital subsidy @ 25% of the Term Loan sanctioned for purchase of plant and machinery shall be available under the Scheme. This would be applicable for proposals/projects, where Term Loans have been sanctioned by the PLIs after notification of this scheme.
- Eligibility for capital subsidy under the Scheme is not linked to any refinance Scheme of the Nodal Agency (ies). Hence, it is not necessary that the PLI will have to seek refinance in respect of the term loans sanctioned by them from any of the refinancing Nodal Agencies.
- SC/ ST Units graduated from small scale to medium scale are eligible for subsidy under SCLCSS for a period of three years from the date of graduation.
- Industry graduating from small scale to medium scale on account of sanction of additional loan under this scheme shall be eligible for assistance.
Subsidy & Ceiling on eligible loan amount:
- Under the scheme, 25 per cent capital subsidy, limited to maximum of Rs. 25 lakh is provided to the SC/ST Micro and Small Enterprises on institutional finance availed of by the eligible SC/ST Enterprises for purchase of Plant & Machinery in the form of Term Loan. The maximum eligible loan under this scheme is Rs. 1 Crore for capital investment in Plant & Machinery.
- SC/ST owned MSEs who have already availed subsidy under the existing CLCSS, before the date of notification of this scheme, cannot claim additional subsidy on account of difference in the rate of subsidy which is now permissible under this scheme.
- In calculating the value of plant & machinery, the following shall be excluded, namely:
- The cost of equipments such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores;
- The cost of installation of plant & machinery;
- The bank charges /service charges paid to the State Small Industries Corporation;
- The cost involved in procurement or installation of cables, wiring, bus bars, electrical control panels (not those mounted on individual machines), oil circuit breakers or miniature circuit breakers which are necessarily to be used for providing electrical power to the plant & machinery or for safety measures;
- Transportation charges (excluding of sales-tax and excise) for indigenous machinery from the place of manufacturing to the site of the factory;
- Charges paid for 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; and
- Cost of fire-fighting equipment.
Duration of the Scheme:
The Scheme shall remain valid till 31-3-2020 subject to availability of funds which means that subsidy to PLIs can be disbursed up to 31-03-2020. Further continuation of the Scheme shall be subject to review/ evaluation.
Working Capital Requirements:
Since success of this scheme to a large extent would depend upon the availability of adequate working capital, lending institutions would like to be assured that the borrowing units have made adequate arrangements for meeting the working capital requirements. The banks should also accord priority in providing adequate working capital support to the assisted units.
Other conditions for loans
- Promoters’ contribution, security, debt-equity ratio, up-front fee, etc. will be determined by the lending agency as per its existing norms.
- Cases covered under National Equity Fund (NEF) Scheme, which are otherwise eligible under this scheme can also be covered under this scheme. Besides, SC/ST MSEs which are availing financial incentives/subsidy under any other scheme from the Government would be eligible for subsidy under this scheme.
- All the eligible PLIs (excluding the nodal banks / agencies as mentioned above) will have to execute a General Agreement (GA) with either of the nodal agencies for availing capital subsidy under the scheme, irrespective of the fact whether refinance is availed by them or not.
- After sanction of the assistance, the eligible PLI will get an agreement executed with the concerned SC/ST MSE on behalf of Government of India (Gol). Format of the agreement to be executed by the eligible PLI with the SC/ST MSE is provided in Appendix-B.
- The PLI would obtain application for assistance under the scheme in the prescribed form provided in Appendix-C.
- The PLI shall furnish subsidy forecast on quarterly basis, through their Head Office (HO), which will act as a nodal office, to the Regional Office (R0)/Branch Office (BO) of the SIDBI or the NABARD (as the case may be) located in the region. The subsidy forecast information for every quarter on or before 1st March for AprilJune quarter, on or before 1st June for July- September quarter, on or before 1st September for October-December quarter and on or before 1st December for January-March quarter, may be furnished as per prescribed format.
- The PLI would release the subsidy amount with each instalment of loan in a manner proportionate to the amount of term loan disbursed (on pro- rata basis), subject to the ceiling of the term loan/ subsidy amount as per applicable guidelines of the scheme.
- The eligible PLI shall furnish details of release of subsidy to the beneficiary units, together with the request for replenishing advance money placed with PLI for release of subsidy, on quarterly basis on March 1, June 1, September 1 and December 1. The requests of PLI for replenishment of advance money for subsidy, however, would be entertained by the nodal agencies only on receipt of complete details of subsidy released to the beneficiary units.
- The PLI shall be responsible for ensuring eligibility for sanction of subsidy to the SC/ST MSE in terms of establishing category and its status with documentary support under this scheme and also for disbursal and monitoring of the assisted units.
Time Limit for applying for Subsidy:
Eligible claim with reference date (date of release of last installment of term loan) of each quarter should reach up to the end of next quarter. For example, if reference date falling between 1st January, 2018 to 31st March, 2018 the claim should be forwarded latest by 30th June, 2018 to Ministry of MSME.
Mechanism for disbursement of subsidy to the unit:
Subsidy is to be kept in the form of Term Deposit Receipt (TDR) for 3 years by PLI after release by the Ministry of MSME in the concerned unit’s account and interest amount on the term loan shall be reduced accordingly. The beneficiary unit shall remain in commercial production for a period of at least three years after installation of eligible plant & machinery on which subsidy under SCISS has been availed. If the unit fulfills the condition of regular payment of loan installments, the TDR will be transferred to unit’s account after three years.