The ways in which Credit Linked Capital Subsidy Scheme allows MSEs to thrive

Technology is a fundamental component for businesses, especially in the manufacturing sector. Products must meet national and global industry standards and require the latest equipment and machinery to do so. However, such investments run into lakhs of rupees, making it difficult for smaller businesses to afford them. Today, up-to-date and cutting-edge technology is needed for businesses to stand out from the competition, boost efficiency, and cut costs. This is where the Credit Linked Capital Subsidy Scheme (CLCSS) can help.

What is CLCSS?

Many small-scale industries in India, including khadi units, village units, and coir industrial units, use outdated technology. Micro and small enterprises (MSMEs) often have difficulty generating capital to meet the costs of acquiring the latest technology. So, in an endeavour to support MSEs, the Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation was launched. 

The scheme was introduced by the Ministry of Micro, Small & Medium Enterprises (MoMSME) and aims to aid MSEs, particularly in rural and semi-rural areas, in upgrading their technology.

What are the features of CLCSS?

  • MSMEs can avail of an upfront subsidy of up to 15% (up to Rs 1 crore) on investment in eligible machinery and equipment

  • The subsidy is available only for businesses that have invested in improved and well-established plant machinery by procuring term loans from the pre-approved list of Primary Lending Institutions (PLIs)

  • Additional 10% subsidy for entrepreneurs belonging to the SC/ST categories or who come from 117 ‘aspiration districts’ of the North-Eastern and hilly regions of the country

  • MSMEs involved in a predefined list of 51 products/sub-sectors may apply for this subsidy as long as they have a Udyog Aadhaar Memorandum (UAM) number

  • Businesses that are converting from small scale to medium-scale may apply for the subsidy

CLCSS aims to uplift MSMEs by supporting them financially to upgrade to state-of-the-art technology, thereby driving up efficiency and lowering costs. This subsidy will boost the standards, production, and revenue of MSMEs. It will help increase the exports of the products manufactured from 40% to 50%. MSEs are the backbone of India’s economy, and the scheme aims to increase their contribution to the GDP from 29% to 50% over the next few years. 

Who can apply for CLCSS?

The following entities can apply for CLCSS:

  • Partnership firms

  • Public and private limited firms

  • Sole proprietorship firms

  • Cooperative societies belonging to small scale industries

Note: Women entrepreneurs get preference

Who is authorised to offer loans under CLCSS?

PLIs authorised to offer loans under CLCSS include regional rural banks, scheduled co-operative and commercial banks, state financial corporations, and the North Eastern Development Finance Corporation Limited (NEDFi).

How to apply for a loan under CLCSS?

MSMEs can apply for a loan under CLCSS via the PLI’s official websites. The lender processes the application and forwards it to a nodal agency under the scheme. The nodal agency delivers the application to the Development Commissioner of MSME. Once the subsidy under the scheme is sanctioned, the approval and funds are forwarded to the nodal agency, which then transfers the funds to the PLI from where the MSME sought the loan.

Last words

MSMEs lose out to the better-equipped competition when they cannot meet contemporary technological standards and requirements. CLCSS goes a long way in helping to finance the technological upgradation of MSMEs. Alternatively, MSEs can apply for an HDFC Bank Working Capital Loan to meet their financial requirements. With a loan up to Rs 10 lakh with no collateral, quick disbursal, and flexible tenure, an HDFC Bank Working Capital Loan could be the perfect solution for your company. So reach out to your Relationship Manager or visit the closest branch to know more.

If you are a micro or small business owner seeking additional financing, HDFC Bank has numerous customised solutions to help you. You can also apply for a Working Capital Loan to get started. For further details, reach out to your Relationship Manager or visit the closest branch to know more.

Click here to apply for your loan now!

Read more on why the government decided on an interest subvention scheme for MSMEs by clicking here.

*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. All loans for MSMEs, at the sole discretion of HDFC Bank limited. Loan disbursal is subject to documentation and verification as per Banks requirement.