CLCSS

Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation of the Small Scale Industries
 
1.Background
 
1.1 The Ministry of Small Scale Industries (SSI) is operating a scheme for technology upgradation of Small Scale Industries (SSI) called the Credit Linked Capital Subsidy Scheme (CLCSS). The Scheme aims at facilitating technology upgradation by providing upfront capital subsidy to SSI units, including tiny, khadi, village and coir industrial units, on institutional finance (credit) availed of by them for modernisation of their production equipment (plant and machinery) and techniques. The Scheme (pre-revised) provided for 12 per cent capital subsidy to SSI units, including tiny units, on institutional finance availed of by them for induction of well established and improved technology in selected sub-sectors/products approved under the Scheme. The eligible amount of subsidy calculated under the pre-revised scheme was based on the actual loan amount not exceeding Rs.40 lakh.
 
1.2 Due to insufficient investment and lack of awareness of both the quality standards and access to modern technologies, a large percentage of SSI units continue with outdated technology and plant & machinery. With increasing competition due to liberalisation of the economy, the survival and growth of the SSI units are critically dependent on their modernisation and technological upgradation. Upgradation of both the process of manufacture and corresponding plant and machinery is necessary for the small enterprises to reduce the cost of production and remain price competitive at a time when cheaper products are easily available in the global market.
 
1.3 It is in this background that the Finance Minister made an announcement in the Budget Speech of 2004-05 to raise the ceiling for loans under the Scheme from Rs. 40 lakh to Rs. 1 crore and rate of subsidy from 12 per cent to 15 per cent. Further, in the light of the experience gathered in implementing the Scheme, certain other modifications were also required to make it more useful to the SSI units, including tiny, khadi, village and coir industrial units, in taking up technology upgradation on a larger scale.
 
1.4  After considering these issues, the CLCSS has been amended as follows :
 
(a).the ceiling on loans under the Scheme has been raised from Rs. 40 lakh to Rs. 1 crore;
(b).the rate of subsidy has been enhanced from 12 per cent to 15 per cent;
(c).the admissible capital subsidy is to be calculated with reference to the purchase price of plant and
 
machinery, instead of the term loan disbursed to the beneficiary unit;
(d).the practice of categorisation of SSI units in different slabs on the basis of their present investment
 
for determining the eligible subsidy has been done away with ; and
(e).the operation of the Scheme has been extended upto 31 st March, 2007.
 
The above amendments are effective from September 29, 2005.
 
2. Objective
 
2.1 The revised scheme aims at facilitating technology upgradation by providing 15 per cent upfront capital subsidy with effect from the 29 th September, 2005 (12 per cent prior to 29.09.2005) to SSI units, including tiny, khadi, village and coir industrial units (hereinafter referred to as SSI units), on institutional finance availed of by them for induction of well established and improved technologies in the specified sub-sectors / products approved under the scheme.
 
3. Scope of the Scheme
 
3.1The scheme would cover the following technology needs / products/sub - sectors:
 
i) Bio-tech Industry

ii) Common Effluent Treatment Plant
iii) Corrugated Boxes