5 Key Points on Credit Linked Capital Subsidy Scheme

he Indian government initiated the Credit Linked Capital Subsidy Scheme for technological upgradation in October 2000. This program aims to assist Micro, Small, and Medium Enterprises (MSMEs) enhance their technological capabilities to boost their revenue generation potential. Nevertheless, to avail of this scheme's benefits, individuals must satisfy particular eligibility criteria and meet other stipulated conditions. Here are the five essential aspects of CLCSS to know about.

What is the CLCSS?

Here’s the credit linked capital subsidy scheme meaning. In India, many MSMEs are often constrained by outdated technology because of financial limitations. However, this advanced credit initiative aims to assist MSMEs operating in semi-urban and rural areas enhance their current equipment and technology.

The CLCSS, initiated by the Micro, Small and Medium Enterprises’ Ministry, is designed to stimulate the production of the small-sized industries by allowing them to avail of the subsidised capital. With the help of this program, qualified enterprises can benefit from a 15% capital subsidy on loans obtained from financial institutions.

The scheme’s primary objective encompasses the intent to modernise the machinery and equipment used by enterprises with cutting-edge technology, regardless of whether they are expanding or not. In addition to existing MSMEs, newly established enterprises that adhere to CLCSS guidelines may also qualify as a beneficiary of the scheme.

Five Things to Know About the Credit Linked Capital Subsidy Scheme For MSME

To learn more about the credit-linked capital subsidy scheme for MSME, here are five things you must know:

What Are the Features Of CLCSS?

• Micro, Small, and Medium Enterprises (MSMEs) can receive an upfront subsidy of approximately 15% (capped at Rs 1 crore) for their investments in eligible machinery and equipment.
• This subsidy is exclusively accessible to businesses that have invested in upgraded and established plant machinery through term loans obtained from the pre-approved roster of Primary Lending Institutions (PLIs).
• Entrepreneurs belonging to the ST/SC categories or hailing from 117 'aspiration districts' in the North-Eastern and hilly regions of the nation are eligible for an additional 10% subsidy.
• MSMEs engaged in a predefined list of 51 products/sub-sectors are eligible to apply for this subsidy if they possess a Udyog Aadhaar Memorandum (UAM) number. Businesses transitioning from small to medium-scale operations can apply for this subsidy.

Benefits of the CLCSS

• Facilitates the technological advancement of small-scale industries across diverse sectors and product categories, as specified by the MSME Ministry.
• Provides a 15% subsidy for procuring qualified plant equipment and machinery, thereby alleviating the overall loan obligations of micro and small enterprises.
• Promotes the development of rural industries, enabling them to produce top-notch products.

Documents Required

• Voter ID / Aadhar card / PAN card
• Applicant's KYC documents
• Updated business address proofs
• Any other document required by the lender

Eligibility Criteria

• The 15% capital subsidy rate for qualified plant and machinery under this program is applicable exclusively to projects where the eligible Primary Lending Institution (PLI) have approved term loans.
• Micro and Small Enterprises with valid Udyog Aadhaar Memorandum numbers meet the eligibility criteria.
• Industries transitioning from small to medium-scale due to approving additional loans through CLCSS will be eligible for support.
• The eligibility for capital subsidy within this scheme isn’t dependent on any refinance program for any of the nodal agencies.
• This scheme will also consider sectors/activities that are export-oriented and have a labour-intensive nature.

Application Process

MSMEs can submit a loan application through the official websites of PLIs under CLCSS. The PLI reviews and submits the application to a designated agency operating within the scheme. The said agency then conveys the application to the Development Commissioner of MSME. When the subsidy is approved, the authorisation and funds are routed back to the designated agency, which disburses the funds to the PLI from which the MSME originally applied for the loan.

Conclusion

MSMEs often fall behind their better-equipped competitors when they cannot meet current technological standards and demands. Credit Linked Capital Subsidy Scheme plays a significant role in providing financial support for the technological advancement of MSMEs.

Take advantage of the subsidies provided by the CLCSS to enhance your plant equipment and machinery. Before applying for a term loan, ensure that your primary lending institution is included in the CLCSS scheme.

If you require additional guidance in selecting the appropriate lender for your small business loan, don't hesitate to reach out to loan specialists for assistance.