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What is Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation?

Updated on :  

08 min read.

The Ministry of Small Scale Industries (SSI) has come up with a scheme right for technology upgradation and is called the Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation. The programme provides upfront cash for you to modernise the production equipment and techniques.

Know more about the CLCSS here:

What was the objective of CLCSS for Technology Upgradation?

The objective of the Credit Linked Capital Subsidy Scheme for Technology Upgradation is to offer 15% upfront capital subsidy on institutional finance availed by the SSI units, including khadi, tiny, village, and coir industries. The support is provided when the finance is availed to institute well-established and latest technologies in the workflow of the eligible sectors/products.

Some of the eligible sectors that can avail the subsidy on the financing are:

  • Biotech industry
  • Corrugated boxes
  • Pharmaceuticals and drugs
  • Food processing, including ice cream manufacturing
  • Leather and leather products
  • Steel furniture
  • Paints, varnishes, alkyds, and alkyd products
  • Sewing machine industry
  • Cosmetics
  • Ready-made garments

Nodal banks and agencies for the scheme

The Small Industries Development Bank of India (SIDBI) and the National Bank for Agriculture and Rural Development (NABARD) were the nodal agencies for implementing the scheme. Also, nine public sector banks and government agencies were appointed as nodal banks/agencies for the scheme implementation, such as State Bank of India, Canara Bank, Bank of Baroda, Andhra Bank, and the National Small Industries Corporation Limited.

What is the need for technology upgradation?

A majority of the SSI units were operating with outdated technology, machinery, and plants. This was due to insufficient investment and the lack of awareness regarding the quality standards as well as lack of access to modern technology. It was tough for such SSI units to sustain the competition due to the liberalisation of the economy.

Their survival was critically based on modernisation and technological upgradation. This could reduce the cost of production and let the SSI units remain competitive in terms of pricing in the market.

Eligible primary lending institutions and beneficiaries

Eligible Primary Lending Institutions

  • Scheduled Commercial Banks.
  • Scheduled Co-operative Banks.
  • Regional Rural Banks (RRBs).
  • State Finance Corporations (SFCs).
  • North Eastern Development Financial Institution (NEDFi).

Eligible Beneficiaries

  • Women entrepreneurs are given preference.
  • Sole-proprietors, partnerships, co-operative societies, public and private limited companies under SSI sector are eligible.
  • Existing units, registered with the State Directorate of Industries, can apply for upgrading the existing machinery and plant.
  • New units, registered with the State Directorate of Industries, which has the appropriate technology approved by GTAB/TSC, can apply for a subsidy.
  • The term loan for upgrading must be sanctioned on or after 29 September 2005.
  • Machinery bought under the Hire Purchase Scheme of the NSIC was eligible.
  • Businesses upgrading from small scale to medium-scale on account of the additional loan was eligible.
  • Labour intensive, export-oriented activities were also considered.

What does technology upgradation mean?

Technology upgradation in this context meant a step up from the current technology level to a higher-end technology that was capable of increasing productivity, improving product quality, and environmental conditions, including the work environment of the unit. It also included installing energy-conserving machinery and implementing anti-pollution measures. In-house quality testing and quality control measures were also covered under the definition of technology upgradation.

However, replacing the existing machinery/equipment with the same technology/machinery did not qualify for the subsidy. Purchasing second-hand machinery was not encouraged either.

Determining the eligible loan amount

SSI units could get a maximum capital loan of Rs.100 lakh. Further, a subsidy of 15% would translate to a maximum subsidy of Rs.15 lakh under the scheme. Units that have already availed subsidy are not allowed to claim the additional subsidy. The scheme was operational until 31 March 2007, i.e. until the subsidy disbursed reached Rs.600 crore.

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