The Ministry of Micro, Small, and Medium Enterprises (MoMSME) introduced the Credit Linked Capital Subsidy Scheme (CLCSS) in the financial year 2000-2001 to facilitate the Micro and Small Enterprises (MSEs) located in rural and semi-urban areas for upgrading their technology. 

A component of the Credit Linked Capital Subsidy and Technology Upgradation Scheme (CLCS-TUS), CLCSS offers an upfront subsidy of 15 percent on institutional finance of up to INR 1 crore (i.e. a maximum of INR 15 lakh) availed by the MSEs for upgrading plant, equipment, and machinery. The subsidy is provided only for the approved 51 sub-sectors and products by the MoMSME.

CLCSS Eligible Machinery List (Including Products/Sub­-sectors)

Bio­tech IndustryCommon Effluent Treatment PlantCorrugated BoxesDrugs and Pharmaceuticals
Dyes and IntermediatesIndustry based on Medicinal and Aromatic plantsPlastic Moulded/ Extruded Products and Parts/ ComponentsRubber Processing including Cycle/ Rickshaw Tyres
Food Processing (including Ice Cream manufacturing)Poultry Hatchery and Cattle Feed IndustryDimensional Stone Industry (excluding Quarrying and Mining)Glass and Ceramic Items including Tiles 
Leather and Leather Products including Footwear and GarmentsElectronic equipment viz test, measuring and assembly/ manufacturing, Industrial process control; Analytical, Medical, Electronic Consumer & Communication equipment etc. Fans and Motors IndustryGeneral Light Service (GLS) lamps
Information Technology (Hardware)Mineral Filled Sheathed Heating ElementsTransformer/ Electrical Stampings/ Laminations/Coils/Chokes including Solenoid coilsWires and Cable Industry
Auto Parts and ComponentsBicycle PartsCombustion Devices/ AppliancesForging and Hand Tools
Foundries – Steel and Cast IronGeneral Engineering WorksGold Plating and JewelleryLocks
Steel FurnitureToysNon­-Ferrous FoundrySports Goods
CosmeticsReadymade GarmentsWooden FurnitureMineral Water Bottle
Paints, Varnishes, Alkyds and Alkyd productsAgricultural Implements and Post Harvest EquipmentBeneficiation of Graphite and PhosphateKhadi and Village Industries
Coir and Coir ProductsSteel Re­rolling and/or Pencil Ingot making IndustriesZinc SulphateWelding Electrodes
Sewing Machine Industry

Credit Linked Capital Subsidy Scheme Eligibility

The eligibility criteria to apply for subsidy under CLCSS are listed below.

  • Applicant MSEs must have a valid Udyog Aadhaar Memorandum (UAM) number.
  • A capital subsidy of 15 percent would be provided only for projects approved under the CLCSS.
  • The capital subsidy would be provided only to projects for which term loans have been sanctioned by any Primary Lending Institutions (PLI) on or after 29th September 2005.
  • Both existing projects or new projects of the approved industry are eligible.
  • Machinery purchased under the Hire Purchase Scheme of the National Small Industries Corporation (NSIC) are also eligible for subsidy.
  • Small scale industries that would be promoted to medium scale industries due to the sanction of the additional loan under CLCSS are eligible for assistance. 
  • Labour or/and export intensive new sectors or activities are also eligible for the subsidy.
  • Primary Lending Institutions (PLI) do not have to seek to refinance from the Nodal Agencies for the sanctioned term loans as CLCSS is not linked to any refinance scheme of the Nodal Agencies. 

Eligible Business Categories

  • Women Entrepreneurs
  • Sole Proprietorships
  • Partnerships
  • Co­operative Societies
  • Private Limited Companies (SSI sector)
  • Public Limited Companies (SSI sector)

Note: Priority would be given to women entrepreneurs.

Nodal Agencies for CLCSS

  • National Bank for Agriculture and Rural Development (NABARD)
  • Small Industries Development Bank of India (SIDBI) 
  • State Bank of India
  • Canara Bank
  • Bank of Baroda
  • Punjab National Bank
  • Bank of India
  • Andhra Bank
  • State Bank of Bikaner & Jaipur
  • Tamil Nadu Industrial Investment Corporation

Eligible Primary Lending Institutions (PLIs) for CLCSS

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

The PLIs are eligible as a lender under CLCSS only after executing a General Agreement (GA) with any nodal agencies.

How to Apply for Subsidy Under CLCSS?

Applicant MSEs can apply for subsidy under CLCSS both online and offline. The Online Application and Tracking System was introduced in 2013 for a hassle-free application process. 

Once the application is submitted either online through the official website of the selected PLI or offline by visiting any branch of the PLI, the PLI sends the application to the MoMSME through the Nodal Agencies for releasing the subsidy. After the ministry verifies the documents, the funds are released to the Nodal Agency, which then transfers to the PLI.

Documents Required to Apply for CLCSS

  • Application form
  • Business proof: Certificate of practice, GST registration and filing documents, Partnership deed, MOA & AOA, Shop Act licence
  • KYC documents: Passport, PAN card, Aadhar card, Voter’s ID card, Driving licence, Electricity bills, Telephone bills or Water bills, etc.
  • Recent passport size photograph
  • Any other documents instructed by the lending institution.

Benefits of Credit Linked Capital Subsidy Scheme

Here are a few benefits of the CLCSS.

  • Provide MSEs with an opportunity to upgrade their equipment, plant, and machinery.
  • Help MSEs to manufacture high-quality products in large numbers.
  • Promote industrialisation in rural and semi-urban areas.
  • Reduces the loan burden of MSEs by providing subsidies.

Credit Linked Capital Subsidy Scheme (CLCSS) At a Glance

According to the official website of the Development Commissioner, Ministry of Micro, Small & Medium Enterprises (MSME), the scheme was enforced till 31st March 2020. And in the financial year 2018-2019, MoMSME successfully disbursed INR 980.33 crore to the 14,155 MSEs. 

Frequently Asked Questions

What is CLCSS’s new scheme 2020-2021?

CLCSS was enforced till 31st March 2020, and after that, the Ministry of Micro, Small, and Medium Enterprises has not launched any new scheme under CLCSS.

What is the CLCSS subsidy lock-in period?

There is no lock-in period for CLCSS. However, the PLI has to keep the subsidy in the form of Term Deposit Receipt (TDR) for three years after release by MoMSME.

How to check CLCSS subsidy status?

You can check the status of your CLCSS subsidy by visiting the official website of the Development Commissioner, Ministry of Micro, Small & Medium Enterprises (MSME).

Related Links

Stand Up India Scheme

Pradhan Mantri Mudra Yojana

Mudra Loans For MSME

Government Schemes

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