Home > Services > Government Subsidy Loan For MSMEs > CLCSS – Credit linked capital subsidy scheme

CLCSS – Credit Linked Capital Subsidy Scheme

Small firms, particularly those in the industrial sector, rely heavily on technology. Micro, small, and medium-sized enterprises must invest in machinery and equipment to meet global and national standards. With machinery costs in the millions of rupees, it is difficult for MSMEs to generate the funds required to invest in new equipment and technology upgrades.

This is where the ground-breaking CLCSS (Credit linked capital subsidy scheme) steps in. This article includes information on the CLCSS, including the benefits available, the eligibility requirements, and how to apply.

What is CLCSS Scheme?

For technology up-gradation of Micro and Small Enterprises (MSEs), the Ministry of Micro, Small and Medium Enterprises (M/o MSME) has launched a subsidy scheme called Credit linked capital subsidy scheme (CLCSS). This scheme’s main goal is to help Small Scale Industries (SSI) grow and develop in both rural and urban areas. A large percentage of SSI units are still using outdated technology and equipment. The Scheme aims to help SSI units, such as tiny units, Khadi units, village units, and coir industrial units, upgrade their technology by providing an upfront capital subsidy. SSIs are given a capital subsidy to modernize their production equipment (plant and machinery) and techniques.

Key Features of the CLCSS

  • Businesses can receive up to a 15% subsidy on eligible machinery investment under the CLCSS (up to a maximum of Rs. 1 crore).
  • Only businesses that have invested in eligible plant machinery using term loans from the pre-approved list of PLIs are eligible for the 15% subsidy (Public Lending Institutions).
  • The subsidy is also available to industries transitioning from small to medium scale due to additional loans under the CLCSS.

Benefits of Credit Linked Capital Subsidy Scheme

SSI industries benefited greatly from this scheme. The following are some of the advantages:

  • The main goal is to assist in the up-gradation of technology in Tiny and SSI units in the specified products / sub-sectors as notified by the Government of India by providing a 15% capital subsidy for eligible plants and machinery investments up to Rs 1 crore.
  • Many non-productive industries have benefited from the implementation of this scheme.
  • This scheme applies to existing SSI Units as well as newly registered SSI Units.
  • The plan would include the following technologies, needs, products, and sub-sectors.

1. Drugs and Pharmaceuticals 13. Mineral Water Bottle 25.Transformer/ Electrical Stampings/ Laminations /Coils/Chokes including Solenoid coils 37. Industry based on Medicinal and Aromatic plants
2. Glass and Ceramic items including tiles 14. Toys 26. Mineral Filled Sheathed Heating Elements 38. Glass and Ceramic Items, including tiles
3. Biotech Industry 15. Steel Furniture 27.  Control; Analytical, Medical, Electronic Consumer & Communication equipment, etc. 39. Information Technology (Hardware)
4. Food Processing (including Ice Cream manufacturing) 16. Readymade Garments 28. Forging & Hand Tool’s xxvi) Foundries – Steel and Cast Iron 40. Plastic Moulded/ Extruded Products and Parts/ Components
5. Wooden Furniture 17. Wires & Cable Industry xxii) Auto Parts and Components 29. Combustion Devices/ Appliances 41. Non-Ferrous Foundry
6. Rubber Processing including Cycle/ Rickshaw Tyres 18. Steel Re-rolling and /or Pencil Ingot making Industries 30. Khadi and Village Industries 42. Sewing Machine Industry
7. Machine Tool 19.  Agricultural Implements and Post-Harvest Equipment 31. Paints, Varnishes, Alkyds, and Alkyd products 43. Locks
8. Cosmetics 20. Sport Goods 32. Electronic equipment via test, measuring, and assembly/ manufacturing, Industrial process 44. Welding Electrodes
9. Fans & Motors Industry 21 Agricultural Implements and Post-Harvest Equipment 33. General Light Service(GLS) lamps 45. Dimensional Stone Industry (excluding Quarrying and Mining)
10. Dyes and Intermediates 22. Beneficiation of Graphite and Phosphate 34. Common Effluent Treatment Plant 46. Corrugated Boxes
11. Printing Industry 23. General Engineering Works xxviii) Gold Plating and Jewellery 35. Leather and Leather Products including Footwear and Garments 47. Coir and Coir Products
12. Zinc Sulphate 24. Poultry Hatchery & Cattle Feed Industry 36. Bicycle Parts 48. Industrial Gases

Eligibility to apply for CLCSS

• Under the scheme, a capital subsidy of 15% on eligible plant and machinery will be available only for projects where term loans have been approved by an eligible PLI.

• Assistance is available to industries that are upgrading from small to medium scale as a result of additional loan approval under the CLCSS.

• Export-oriented and labour-intensive new sectors/activities will be considered under this scheme, and eligibility for a capital subsidy is not linked to any refinance scheme for nodal agencies.

Documents required

  • Aadhar card / Voter ID / PAN card
  • Address proof
  • Business proof
  • Recent photographs
  • KYC documents

Steps to apply for CLCSS using the capital subsidy scheme application form

The following steps need to be followed to apply for CLCSS:

  • The applicant must apply through a Primary Lending Institution, which then submits the application to MSME for funding release – https://my.msme.gov.in/mymsme/reg/COM CLCSSAppForm.aspx.
  • The applicant must then log in to the MSME website using their username and password.
  • Then, on the left side, the applicant must click on the “Apply for Subsidy” link.
  • Then he must carefully fill out the application form.
  • The applicant can also include Equipment or Machinery, as well as their costs.
  • If necessary, the form can be edited or modified later.
  • It will also be checked and approved by the Nodal office.
  • Finally, funds will be transferred to the nodal agencies where the primary account exists after approval.

FAQs about CLCSS


Who are the recipients of this subsidy program?

Private and public limited companies in the SSI sector, cooperative societies, partnerships, and proprietorships are all eligible for this scheme.

What is the current CLCSS revised rate?

The maximum limit for an eligible loan under the current revised scheme is Rs. 100 lakhs, which is in accordance with the subsidy limit, which is either Rs. 15 lakhs (minimum) or 15% of the total – whichever is lower.

Is CLCSS appropriate for medium and large businesses?

No, CLCSS is currently only available to SSIs (Small Scale Industries) or industries that have recently escalated or upgraded from SSIs to Medium Scale Industries.

What does CLCSS mean by passable working capital?

The procurement and eligibility of passable working capital are critical to the success of the CLCSS upgrade scheme. Rigorous institutions require a formal guarantee that the businesses that are borrowing have made satisfactory arrangements and preparations to obtain the necessary working capital.

Is CLCSS only for people who live in rural areas?

CLCSS can be used to treat SSIs in both urban and rural settings. It is appropriate for all small-scale businesses that want to advance technologically and receive modernized updates and upgrades for their equipment.

Which Nodal Agencies are in charge of CLCSS subsidy distribution?

The following Nodal Agencies oversee the distribution of subsidies:

1. SIDBI (Small Industries Development Bank of India)

2. NABARD (National Bank for Agriculture and Rural Development)

3. Indian Bank

4. Bank of India

5. State Bank of Bikaner and Jaipur

6. Bank of Baroda

7. Canara Bank

8. Corporation Bank

9. State Bank of India

10. Andhra Bank

11. Punjab National Bank

12. Tamilnadu Industrial Investment Corporation.

Is it possible for the lending agency to impose conditions to ensure that the funds are used for the best possible management?

Yes, if the lending agency discovers that the applicant provided false information, the agency has the authority to revoke the funds that have been sanctioned.

Know more about Government Subsidy Loan and Business Loan