CLCSS subsidy scheme for micro and small enterprises

The Ministry of Micro, Small and Medium Enterprises is operating a scheme namely “Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation of Micro and Small Enterprises. If you are a MSE (Micro & Small Enterprise) manufacturer and if you want to modernize your equipment/plant/machineries, you may get capital subsidy of up to Rs.15 lakh (15%) on overall investment ceiling of Rs.1 Crore. The manufacturing entrepreneurs who are eligible under the scheme include sole Proprietorships, Partnerships, Cooperative societies, and Private and Public limited companies in the MSE sector. The scheme offers preference to Women entrepreneurs to avail the facility. The entrepreneurs who belong to SC/ST communities are eligible for up front subsidy up to Rs.25 lakh (25%) under Special Credit Linked Capital Subsidy Scheme (SCLCSS) for MSEs under National Scheduled Castes and Scheduled Tribes Hub Scheme. Under SCLCSS scheme, the overall investment ceiling of Rs.1 Crore for this category is without any restriction on the sector or machinery & technologies.

The manufacturing activities that are covered under the scheme:

Presently, more than 1500 well established/improved technologies with more than 51 sub-sectors are approved under the Scheme.        They include Bio-tech 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, Dimensional Stone Industry (excluding Quarrying and Mining), Glass and Ceramic Items including Tiles, Leather and Leather Products including Footwear and Garments, Electronic equipment viz test, measuring and assembly/ manufacturing, industrial process control; Analytical, Medical, Electronic Consumer & Communication equipment etc. Fans & Motors Industry, General Light Service(GLS) lamps, Information Technology (Hardware), Mineral Filled Sheathed Heating Elements, Transformer/ Electrical Stampings/ Laminations /Coils/Chokes including Solenoid coils, Wires & Cable Industry,  Auto Parts and Components,  Bicycle Parts, Combustion Devices/ Appliances, Forging & Hand Tools, Foundries – Steel and Cast Iron, General Engineering Works, Gold Plating and Jewellery, Locks, Steel Furniture, Toys, Non-Ferrous Foundry, Sport Goods, Cosmetics, Readymade Garments, Wooden Furniture, Mineral Water Bottle, Paints, Varnishes, Alkyds and Alkyd products, Agricultural Implements and Post-Harvest Equipment, Beneficiation of Graphite and Phosphate, Khadi and Village Industries,  Coir and Coir Products, Steel Re-rolling and /or Pencil Ingot making Industries, Zinc Sulphate, Welding Electrodes, Sewing Machine Industry. The Labour intensive and/or export oriented new sectors/ activities will be considered for inclusion under the scheme. It would also include installation of improved packaging techniques as well as antipollution measures and energy conservation machinery. Further, the units in need of introducing facilities for inhouse testing and online quality control would qualify for assistance, as the same is a case of technology upgradation.

Financial institutions who lend under the scheme:

All Scheduled Commercial Banks, Scheduled Cooperative Banks [including the urban cooperative banks coopted by the SIDBI under the Technological Upgradation Fund Scheme (TUFS) of the Ministry of Textiles], Regional Rural Banks (RRBs), State Financial Corporations (SFCs) and North Eastern Development Financial Institution (NEDFI) who have executed a General Agreement (GA) with SIDBI and NABARD have been financing the SME borrowers under the scheme. The prospective borrowers may apply for loan either through primary lenders or directly at nodal banks/agencies. SIDBI, NABARD, Canara Bank, Bank of Baroda, Bank of India, the Tamilnadu Industrial Investment Corporation Limited, Chennai (TIICL), Andhra Bank, State Bank of India, Punjab National Bank, Corporation Bank and Indian Bank are the nodal agencies for implementation of the CLCSS.

The process of subsidy claim:

The admissible capital subsidy is calculated on the purchase price of plant and machinery, instead of the term loan disbursed to the beneficiary unit. The entrepreneurs who wish to avail loan under subsidy scheme shall approach to the nodal Banks/Agencies /Eligible financial institution for sanction of term loan for purchase of eligible machinery. The financial institutions / nodal banks / agency will sanction & recommend the subsidy eligible applicant to the office of DC (MSME) for release of subsidy.

The borrower shall apply for subsidy online through Primary Lending Institutions (PLIs), from where they have availed term loan for up-gradation of technology. The completed application will be uploaded by the loan disbursing  financial institution through Online  ‘Application and Tracking System’ to the attached Nodal Agency, which, in turn, recommends the application online to Office of DC (MSME) for release of subsidy. After processing of application and subject to availability of funds, due approval is accorded from competent authority and concurrence of Internal Finance Wing, after which funds are released to Nodal Agencies. Funds are then transferred by the Nodal Agencies to the financial institution where the account of the MSE is operated.

The subsidy released to the unit by the DC (MSME) will be kept in the form of term deposit for 3 years by the bank which has financed the project. The deposit amount does not earn interest but simultaneously interest amount on loan will be proportionately reduced.  The deposit amount will be credited to the beneficiary’s account after 3 years, once the unit is able to continue  in commercial production for a period of at least three years after installation of eligible plant & machinery on which subsidy under CLCSS has been availed.

Items/expenditures not considered for subsidy while calculating the value of plant & machinery:

The second hand machinery or replacement of existing equipment/technology with the same equipment/technology will not qualify for subsidy under this scheme. The money spent on installation of plant and machinery, 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, generator, extra transformer, gas producer plants (except where these have been approved for specific product/subsector by the GTAB) ; Cost of tools, jigs, dies, moulds and spare parts, consumable stores etc. is not considered for subsidy. The cost of bank charges,   transportation charges for indigenous machinery, Charges paid for technical knowhow for erection of plant & machinery; Cost of storage tanks which store raw materials, finished products and Cost of firefighting equipment are not considered for calculation of subsidy.