Credit Linked Capital Subsidy Scheme (CLCSS)

The Credit Linked Capital Subsidy Scheme is a government initiative to provide financial assistance to Small and Medium Enterprises (SMEs). The subsidy helps these entities invest in technology and machinery and empower them to enhance productivity.

This scheme encourages firms to grow, upgrade and unleash their potential in various ways. 

• Helps boost the growth and expansion of industries situated in rural and semi-urban areas

• Upgrades the standard of technology used in the production process by various small and medium enterprises

• Reduces the overall loan burden of SMEs to a considerable extent by extending subsidies on the purchase of eligible machinery and equipment

• Enables enterprises to manufacture products of superior quality  

Eligible enterprises can benefit from a capital subsidy on the loans obtained from financial institutions under CLCSS to upgrade technology. Here are some essential points:

• SMEs can get a capital subsidy of 15% on institutional finance of up to ₹1 Crore

• MSMEs operating in the approved 51 sectors and sub-sectors can apply for the scheme and receive financial assistance

• Entities seeking eligibility for this subsidy must obtain term loans from approved Primary Lending Institutions (PLIs) designated by the Ministry of Micro, Small and Medium Enterprises

Here is a list of banks and agencies that are identified as nodal agencies for CLCSS:

1. Small Industries Development Bank of India (SIDBI)

2. National Bank for Agriculture and Rural Development (NABARD)

3. Tamil Nadu Industrial Investment Corporation (TIICL)

4. State Bank of India (SBI)

5. Bank of Baroda (BOB)

6. Punjab National Bank (PNB)

7. Bank of India (BOI)

8. Canara Bank

9. Indian Bank

10. Andhra Bank 

11. Corporation Bank

A total of 51 sectors and sub-sectors are eligible to get financial assistance under CLCSS. To benefit from the scheme, understand the eligibility criteria as follows. 

• Existing and new Micro and Small Enterprises (MSEs) can benefit by receiving institutional finance for eligible investments in plant and machinery

• MSEs become eligible when transitioning from small scale to medium scale through additional loans

• SC/ST entrepreneurs, women entrepreneurs, and SMEs in the North Eastern regions, hilly states ((J&K,Himachal Pradesh, Uttarakhand), Lakshadweep, Andaman & Nicobar Islands receive special subsidies under CLCSS

• Applicants must have a valid Udyog Aadhaar Number (UAN) and entry into the MSME Data Bank

• Benefits are applicable only when eligible machinery is purchased through term loans from notified lending agencies

• Second-hand and fabricated equipments and machineries are not eligible

• Entities should not be eligible to receive a subsidy for technological upgradation from State, Central, or UT Government

To benefit from the scheme, eligible entities need to submit these documents:

• Recent passport-size photographs 

• Proof of identity

• Proof of business

• Proof of address

• PAN Card of the applicant and the business

Applying for the scheme is easy, and you can do so by applying it online through Primary Lending Institutions (PLIs). Here are the steps:

1. Go to the official MSME website and log in using the User ID and password

2. Navigate to the 'Apply for Subsidy' link in the User Task menu

3. Enter the required information to proceed

4. Complete the form by providing details about the machinery or equipment

5. Review the provided information and submit the form for processing

Once your form is verified and approved, it will go through nodal verification for loan sanction.

Here are some essential points to know regarding the loan amount:

• Eligible entities can receive a maximum capital loan of ₹1 Crore, with a corresponding subsidy of up to 15%

• The subsidy of 15% can go up to a maximum amount of ₹15 Lakhs under the scheme

• Entities that have already received a subsidy are not eligible for additional claims