Get the Tata Capital App to apply for Loans & manage your account. Download Now

Blogs SUPPORT

Equipment Finance

Avail Digital Equipment Loans
up to Rs. 1 Crore

  • Attractive ROIs
  • Customizable Loan tenure

Equipment Leasing

Avail Leasing solutions
for all asset classes

  • Up to 100% financing
  • No additional collateral required

New Commercial Vehicle Financing

  • First time user
  • Retail and strategic Clients

Used Commercial Vehicle finance

  • Repurchase
  • Refinance
  • Top up
  • Balance Transfer

Tata Capital > Blog > Loan for Business > How to Apply for CLCS Scheme for MSMEs and Industries Included in it

Loan for Business

How to Apply for CLCS Scheme for MSMEs and Industries Included in it

How to Apply for CLCS Scheme for MSMEs and Industries Included in it

Did you know around 500 new multinational corporations (MNCs) are projected to establish captive centres in India by FY25?

In today's competitive business environment, India's Micro and Small Enterprises (MSEs) must upgrade technologically to compete effectively. Numerous small-scale industries in India, such as khadi, village, and coir industrial units, rely on outdated technology.

Recognising the struggles the Micro and Small Enterprises (MSEs) faced, the government initiated the Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation. CLCSS offers vital support by providing subsidies for technology advancement, enabling enterprises to enhance productivity and competitiveness.

Read on to learn how CLCSS can empower MSEs for success.

What is the CLCSS scheme?

The Ministry of Micro, Small, and Medium Enterprises (M/o MSME) introduced the Credit Linked Capital Subsidy Scheme (CLCSS) to address the challenge MSEs face in upgrading their technology due to the increasing cost of machinery and advanced technology.

This scheme provides upfront credit assistance to MSEs for technology upgradation, particularly benefiting small and micro enterprises in semi-urban and rural areas.

Who is eligible for the CLCSS scheme?

Here's what you need to know about the eligibility for Credit Linked Capital Subsidy Scheme for MSMEs:

1. Enterprises must possess a valid Udyog Aadhaar Memorandum (UAM) number.

2. Enterprises must fall under one of the 51 sub-sectors specified by the Ministry of MSME.

3. Enterprises in export-oriented or labour-intensive sectors are eligible for the subsidy.

4. Eligibility is not linked to any refinance scheme for the nodal agencies overseeing the scheme.

How to apply for the CLCSS scheme?

Since 2013, online application and tracking have been introduced for CLCSS subsidy. Below are the steps to apply for the scheme:

Step 1: Preparation

1. Assess technology needs and machinery requirements.

2. Calculate the estimated subsidy amount required.

Step 2: Eligibility check

1. Obtain a valid Udyog Aadhaar Memorandum (UAM) number.

2. Ensure the enterprise falls under one of the eligible sub-sectors.

Step 3: Application submission

1. Contact the Primary Lending Institution (PLI) participating in CLCSS.

2. Obtain the CLCSS subsidy application form.

3. Complete the application form and submit it to the PLI with the required documents.

Step 4: Verification and approval

1. The PLI uploads the application and documents online.

2. The nodal agency verifies the application details.

3. Approval is granted by the Office of Development Commissioner (MSME).

Step 5: Disbursement

1. The subsidy amount is allocated to the Primary Lending Institutions (PLIs).

2. The PLI transfers the funds to the beneficiary's account.

Step 6: Post-disbursement follow-up

1. Submit a utilisation certificate to the nodal agency.

2. The Office of Development Commissioner (MSME) may conduct monitoring and evaluation activities.

Documents required for the CLCSS scheme

Now that you know the application process, here's a breakdown of the documents required for CLCSS to equip you with the necessary information to streamline your application process:

1. PAN card

2. Identity proof

3. Address proof

4. Recent passport-size photographs.

5. Business proof (Partnership deed, company registration, etc.)

6. Proof of type of company (partnership, sole proprietorship, etc.).

7. Other KYC documents for business loan

Which products and industries are covered under the CLCSS scheme?

The scheme includes a wide range of industries, such as:

1. Drugs and pharmaceuticals

2. Printing industry

3. Bicycle parts

4. Paints and varnishes

5. Biotech industry

6. Food processing

7. Coir products

8. Hardware for Information Technology

9. Fans and motors

10. Welding electrodes

11. Forging and hand tools

12. Industrial gases

13. Steel rolling

14. Sports goods

15. Sewing machine industry

16. Mineral water bottle

17. Industry based on medicinal and aromatic plants

18. Heating elements

19. Cosmetics

20. Toys

21. Zinc Sulphate

22. Combustion devices and appliances

23. Poultry hatchery and cattle feed industry

24. Glass and tiles

25. Locks

Who has the authority to offer loans under the CLCSS scheme?

Under the CLCSS, loans are extended by designated PLIs, which comprise regional rural banks, scheduled cooperative and commercial banks, state financial corporations, and the North Eastern Development Finance Corporation Limited (NEDFi).

What are the benefits of the CLCSS scheme?

Let's understand how this initiative supports MSEs in pursuing growth and innovation. Take a look at the benefits of the CLCSS subsidy:

Reduced loan burden:

Under CLCSS, Micro and Small Enterprises (MSEs) receive a 15% subsidy on acquiring advanced technology. This subsidy directly translates into a reduced reliance on business loans, allowing them to access the necessary machinery and equipment without bearing the full financial brunt.

Increased efficiency:

Adopting advanced technology facilitated by CLCSS enhances the operational efficiency of MSEs. With modern machinery and equipment, MSEs can streamline production processes, lower production costs, and maximise profits.

Employment opportunities:

The growth of rural industries by CLCSS creates jobs for local communities. As MSEs expand their operations and invest in updating their technology, they contribute to improved living standards and economic development.

Global competitiveness:

CLCSS empowers even micro, small, and medium-scale industries to manufacture high-quality products and compete globally. By embracing advanced technology, MSEs can adhere to international standards and effectively penetrate global markets, bolstering India's position in the global business landscape.

Adaptation and scaling:

One of the key advantages of CLCSS is its support for small-scale industries in adapting to modern technology and scaling up their production capacities. By providing financial assistance for technology advancement, CLCSS enables MSEs to evolve with changing market dynamics, expand their operations, and realise their growth potential.

Final thoughts

Micro and small enterprises (MSEs) frequently encounter challenges raising funds to invest in cutting-edge technology. With financial assistance and subsidies, CLCSS helps bridge the funding gap and encourages MSEs to adopt modern technology. The CLCSS subsidy guidelines outline the framework and procedures for implementing the scheme in MSEs.

Tata Capital provides a range of MSME loans tailored according to the unique needs of MSMEs. Whether it's working capital loans or equipment financing, we are committed to supporting businesses on their growth journey.

Leave a Reply

Your email address will not be published. Required fields are marked *