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Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation

Credit Linked Capital Subsidy Scheme

 Credit Linked Capital Subsidy Scheme Guidelines

The Ministry of Small Scale Industries (SSI) is operating a scheme for technology upgradation of Small Scale Industries (SSI) called the Credit Linked Capital Subsidy Scheme (CLCSS). The Scheme aims at facilitating technology upgradation by providing upfront capital subsidy to SSI units, including tiny, khadi, village and coir industrial units, on institutional finance (credit) availed of by them for modernisation of their production equipment (plant and machinery) and techniques. The Scheme (pre-revised) provided for 12 per cent capital subsidy to SSI units, including tiny units, on institutional finance, availed of by them for induction of well established and improved technology in selected sub-sectors/products approved under the Scheme. The eligible amount of subsidy calculated under the pre-revised scheme was based on the actual loan amount not exceeding Rs.40 lakh.

Due to insufficient investment and lack of awareness of both the quality standards and access to modern technologies, a large percentage of SSI units continue with outdated technology and plant & machinery. With increasing competition due to liberalisation of the economy, the survival and growth of the SSI units are critically dependent on their modernisation and technological upgradation. Upgradation 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.

It is in this background that the Finance Minister made an announcement in the Budget Speech of 2004-05 to raise the ceiling for loans under the Scheme from Rs.40 lakh to Rs.1 crore and rate of subsidy from 12 per cent to 15 per cent. Further, in the light of the experience gathered in implementing the Scheme, certain other modifications were also required to make it more useful to the SSI units, including tiny, khadi, village and coir industrial units, in taking up technology upgradation on a larger scale.


The CLCSS scheme is aimed to facilitate the technology upgradation by providing capital subsidy for the SSI and MSME units including tiny, khadi, village and coir industrial units. The technology upgradation of infrastructure and machinery will enable the industry to be competitive enough to produce products in a cheaper way.

Few of the industry which can benefit from the CLCSS scheme are:

  • Bio­tech Industry
  • Common Effluent Treatment Plant
  • Corrugated Boxes
  • Drugs and Pharmaceuticals
  • Dyes and Intermediates
  • Industry based on Medicinal and Aromatic plants
  • Plastic Moulded/ Extruded Products and Parts/ Components
  • Rubber Processing including Cycle/ Rickshaw Tyres
  • Food Processing (including Ice Cream manufacturing)
  • Poultry Hatchery & Cattle Feed Industry
  • and other 30 sectors which can be found in the attached PDF

Nodal Agencies

The funds are distributed through the stipulated agencies to the industries. Small Industries Development Bank of India (SIDBI), NABARD are the direct government agencies along with major Indian banks namely, State Bank of India, Canara Bank, Bank of Baroda and most of the banks. Other eligible lending institutions include NEDFi, State Financial Corporations, Regional Rural Banks.

Eligible Criteria

The beneficiaries are sole proprietorships, partnerships, co-operative societies, private and public limited companies in SSI sector. To avail this scheme, the existing SSIs should register with the respective state governments and comply with necessary. It is also applicable to the industry which would move from SSI to Medium scale industries.

Other criteria which are to be fulfilled by the industries include the contribution from promoters, security fee and other norms required by the agencies. Also, the industry should not have availed any type of loans from State or Central or other agencies except for the units in the North­Eastern Region.

Loan Amount & Capital Ceiling

The aggregate loan of 600 crores by all the lending institutes as the capital subsidy scheme is allowed. Only the cost of plants and machineries are allowed as part of subsidy where the installation, bank charges, transportation, etc. are not covered under the scheme. Also, the industry which availed the loan already and not completed the loan is not eligible for this subsidy scheme.