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Posted on September 6, 2021
All you want to know about Credit Linked Subsidy Scheme
The ministry of MSMEs has launched credit Linked Capital Subsidy Scheme – CLCSS – Micro, Small and Medium Enterprises to provide upfront capital and financial support subsidy to SSIs – Small Scale Industries in rural and urban areas. The main aim of CLCSS is to provide capital for the up-gradation of technology and production equipment that is being used by SSIs.
The priority of CLCSS is to promote these SSIs in every corner of the country to delve into deeper growth and development of their sector whether is it a khadi unit, handicraft unit, coir industrial units, or other small village ventures to be updated and modernized in their tools, techniques, and structures.
What is the CLSS Scheme?
The CLSS or Credit Linked Subsidy Scheme is the only scheme under the PMAY (Urban) directly implemented by the central government. Under this scheme, the government provides a direct subsidy on housing loan interest rates to the various beneficiaries of this scheme.
Who are the beneficiaries of the scheme?
Based on the annual household income, the following four categories can avail the CLSS scheme –
- EWS or Economically Weaker Section: Households with annual income under Rs. 3 lakhs
- LIG or Low Income Group: Households with annual income between Rs. 3 lakhs and Rs. 6 lakhs
- MIG I or Middle Income Group I: Households with annual income between Rs. 6 lakhs and Rs. 12 lakhs
- MIG II or Middle Income Group II: Households with annual income between Rs. 12 lakhs and Rs. 18 lakhs
How does CLSS work?
This scheme allows home buyers to get interest rate concessions of 3-6.5% on the loan amount, depending on the category of the beneficiaries they fall under. This subsidy is calculated over the entire period of the loan and is capped at Rs. 2.67 lakhs.
The concession offered is directly deducted from your loan’s outstanding principal amount. As the principal amount reduces, so does the size of EMIs. To avail of the subsidy, all eligible borrowers must declare their income and submit the title of the property they wish to buy. Once your lender verifies the details, the subsidy is credited to your loan account, lowering your EMIs.
What Is a Credit Linked Capital Subsidy Scheme?
With the cost of machinery and advanced technology becoming more and more expensive, MSMEs are not able to upgrade themselves, which is directly impacting their output.
Understanding this challenge, the Ministry of MSME has launched an innovative upfront credit scheme called credit linked capital subsidy scheme for technology upgradation.
Peculiarly in semi-urban and rural areas, CLCSS subsidy helps small and micro enterprises upgrade their technology by providing financial and capital aid on the purchase of machinery.
The scheme offers 15% subsidy on institutional finance, upto Rs 1 crore, to medium-small and micro enterprises on high-tech machinery investment. Only those businesses can avail of this scheme’s benefits who have invested in technology using term loans borrowed from PLIs (Public Lending institutions).
Eligibility For CLCSS
- To take advantage of the CLCSS subsidy, MSMEs must have a valid UAM number.
- The aid is available to both existing and new enterprises.
- The enterprise must fall under 51 sub-sectors mentioned by M/o MSME.
- If the enterprise is an export-oriented or labour-intensive sector, it will be considered for the subsidy.
- Eligibility for credit linked capital subsidy scheme is not linked to any refinance scheme for the nodal agencies.
- There are 12 nodal agencies for allocating the funds under this scheme: SIDBI, NABARD, Indian Bank, Bank of India, State Bank of Bikaner and Jaipur, Bank of Baroda, Canara Bank, Corporation Bank, State Bank of India, Andhra Bank, PNB, And Tamil Nadu Industrial Investment Corporation.
How To Apply For CLCSS Subsidy
From 2013, online application and tracking have been introduced for applying for CLCSS subsidy. From PLI (Primary Lending Institution), the beneficiary is needed to apply for a CLCSS subsidy.
After this, the beneficiary has to fill an application form available with Primary Lending Institution, which will be uploaded on the online portal by PLI. Now, the uploaded application will be sent to the attached nodal agency, which upholds the application to the Office of DC (MSME).
After the complete verification, the Office of DC (MSME) approves the release of credit linked capital subsidy. From the nodal agency, the money reaches the PLI of the beneficiary and from there to the beneficiary.
Documents Required For CLCSS
- PAN Card of the Beneficiary and the Business
- Identity Proof, Aadhar Card or Voter Card
- Address proof, Personal and Business
- Photographs, Recent Passport Size
- Proof of business like partnership deep, company registration, etc
- Other KYC documents as required
- Company registration proof
- Proof of type of company, partnership, sole proprietorship, or any other
Benefits Of Credit Linked Capital Subsidy Scheme For Technology Upgradation
- With a 15% subsidy on the purchase of advanced technology, the MSMEs’ loan burden decreases.
- At the same time, their efficiency increases, the cost of production decreases which results in maximized profit, and higher growth.
- With the growth in rural industries, employment opportunities increase, and living conditions for the entire local population improves.
- Thanks to this unique scheme, even micro, small and medium industries can now manufacture high-quality products, and compete globally.
- Credit linked capital subsidy scheme is helping small scale industries to adapt and scale, and boost their production.