The Credit Linked Capital Subsidy Scheme – MSME

The Credit Linked Capital Subsidy Scheme – MSME

The credit Linked Capital Subsidy Scheme CLCSS is an innovative credit product launched by the Ministry of Micro, Small and Medium Enterprises MSME scheme. The primary objective of this scheme is to aid the technology up-gradation of micro and small enterprises, especially in rural and semi-urban areas. 

Duration: The CLCS component of CLCS-TU Scheme will be operational/valid with effect from 01.04.2017, till 31st March, 2020 .

Key Features of the CLCSS

  • Under the CLCSS, businesses can avail up to 15% subsidy (with a maximum limit of up to Rs. 1 crore) on investment in eligible machinery. 
  • The subsidy of 15% is available only to businesses that have invested in eligible plant machinery by using term loans borrowed from the pre-approved list of PLIs (Public Lending Institutions). 
  • Industries that are transforming from small scale to medium scale due to sanction of additional loans under the CLCSS are also eligible for the subsidy.

The Revised CLCSS Scheme

In September 2019, Nitin Gadkari, the Union minister msme announced certain changes to the existing CLCSS scheme. The revised scheme will play a crucial role in increasing the contribution of MSMEs to the GDP from the current 29% to 50% in the next few years. Additionally, it will also help in boosting exports from the MSME sector from the current 40% to 50%. 

The revised scheme offers an up-front subsidy of up to Rs. 1 crore (15% of the investment costs) for purchase of machinery and equipment. 

The Cabinet Committee on Economic Affairs allocated funds worth Rs. 2900 for the CLCSS scheme in February. There is no upper limit on the subsidy disbursal for a year, and all eligible MSMEs can apply for the scheme. 

As per the revised scheme, an additional 10% subsidy is offered to entrepreneurs belonging to SC/ST categories and hailing from the “117” aspiration districts that belong to North-eastern states and other hilly terrains in the country.

Who is eligible for the CLCSS? 

  • Micro and small enterprises belonging to the 51 sub-sectors mentioned by the Ministry of MSME are eligible for capital subsidy. 
  • The subsidy is available to both existing and new enterprises. 
  • The subsidy is available to small and micro enterprises in rural and urban areas. 
  • This scheme is available to all micro and small enterprises having a valid UAM number. It can include sole-proprietorships, partnerships, private limited companies including khadi, tiny industries, cottage industries, coir units, village industries and more. 

If you’re looking to upgrade the equipment for your plant or industry, make sure to check out if you’re eligible for this scheme to avail the 15% subsidy. 

Quantum of Subsidy & disbursement:

(i) The scheme is implemented from retrospective date, therefore subsidy should be calculated on the Investment on eligible machineries as per earlier practice. The quantum of capital subsidy would be restricted to 15% (maximum up to Rs.15 lakh) of the eligible investment.

 (ii) The subsidy claims for which the Term loans are sanctioned after date of notification of these guidelines (i.e. 13.08.2019), the subsidy would be 15% of the loan / credit amount or cost of P/M whichever is lower, maximum up to Rs.15 lakh. The ceiling limit of loan to be considered for granting the subsidy under the Credit Linked Capital Subsidy (CLCS) is Rs. 100.00 Lakh. – MSME scheme

Types of units to be covered under the Scheme

i). Existing SSI units registered with the State Directorate of Industries, which upgrade their existing plant and machinery with the state- of -the -art technology, with or without expansion.

ii). New SSI units which are registered with the State Directorate of Industries and which have set up their facilities only with the appropriate eligible and proven technology duly approved by the GTAB/TSC.

Ceiling on eligible loan amount and capital subsidy

The maximum limit of eligible loan under the revised scheme is Rs. 100 lakh. Accordingly, the ceiling on subsidy would be Rs.15 lakh or 15 per cent of the investment in eligible plant and machinery, whichever is lower.

the cost of equipment such as tools, jigs, dies, moulds and spare parts for maintenance and the cost of consumable stores; MSME scheme

  • he cost of equipment 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 cost of research & development equipment and pollution control equipment ( except where these have been approved for specific product/sub sector by the GTAB
  • The cost of generation sets and extra transformer installed by the undertaking as per the regulations of the State Electricity Board; (except where gas based generation sets have been approved for specific product/sub- sector by the GTAB)
  • the bank charges and service charges paid to the National Small Industries Corporation Ltd or 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;
  •  the cost of gas producer plants ( except where these have been approved for specific product/sub sector by the GTAB) ;
  •  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

Products and Industries covered under the CLCSS

 Drugs and pharmaceuticals  Glass and ceramic items including tiles  Bio-tech industry  Food processing  Rubber processing including manufacture of tyres
 Wooden Furniture  Cosmetics  Machine Tools  Fans and motors  Dyes and Intermediates
 Printing Industry  Zinc Sulphate  Steel furniture  Toys  Mineral water bottle
 Wires and cables  Auto industry components  Readymade garments  Pencil ingot making industries  Steel rolling
 Locks  Paints and varnishes  Sports goods  Agricultural equipment  Forging and hand tools
 Bicycle parts  Industrial gases  Poultry, cattle feed and hatchery industry  Gold plating and jewellery  General engineering works
 Leather and leather products  Coir products  Common effluent treatment  plants  Welding electrodes  Sewing machine industry
 Industry-based on medicinal and aromatic plants  Transformers, coils, chokes, electrical stampings, etc.  Heating elements  Hardware for information technology  Plastic moulded components

For a complete list of the eligible products and industries, refer to the official website of the Ministry of MSME. 

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