What is CLCSS?
The Credit Linked Capital Subsidy Scheme (CLCSS) for Technology Upgradation was launched by the Ministry of Micro, Small and Medium Enterprises (MSME) to facilitate technology upgradation in the MSE sector by providing an upfront capital subsidy. The scheme aims to help MSEs modernize their production processes and become more competitive.
Under CLCSS, MSEs can avail 15% capital subsidy (maximum ₹15 lakh) on institutional finance availed for technology upgradation. The scheme is implemented through the Small Industries Development Bank of India (SIDBI) and National Bank for Agriculture and Rural Development (NABARD).
Objectives of CLCSS
- • Facilitate technology upgradation in MSEs through institutional credit
- • Improve productivity and competitiveness of MSEs
- • Reduce cost of production through modern machinery
- • Enhance quality of products manufactured by MSEs
- • Encourage adoption of clean and energy-efficient technologies
- • Support MSEs in accessing better markets through improved capabilities
Key Features
Subsidy Rate
15% of the eligible investment in plant and machinery
Maximum Subsidy
₹15 lakh per eligible enterprise
Maximum Loan
₹1 crore for technology upgradation
Upfront Benefit
Subsidy is credited upfront, reducing loan liability
Eligibility Criteria
To avail benefits under CLCSS, enterprises must meet the following eligibility criteria:
Enterprise Requirements
MSME Status
The enterprise must be registered as a Micro or Small Enterprise (MSE) under the Udyam Registration scheme. Medium enterprises are not eligible for this scheme.
Sector Coverage
Applicable to manufacturing and service sectors. The scheme covers 51 sub-sectors including general machinery for manufacturing and services.
Institutional Finance
Technology upgradation must be financed through institutional credit from eligible banks/financial institutions. Self-financed investments are not eligible.
Eligible Investment
Investment should be in approved machinery/equipment for technology upgradation. The list of eligible machinery is specified by the government.
Eligible Sectors
CLCSS covers 51 sub-sectors including:
Textile
Spinning, weaving, processing, garments
Food Processing
Dairy, grain milling, bakery, beverages
Engineering
Machine tools, auto components, foundry
Electrical
Motors, transformers, switchgear
Chemical
Pharmaceuticals, cosmetics, paints
General
All eligible machinery for MSEs
Eligibility for New vs Existing Units
New Units
- • Setting up new MSE with modern technology
- • First-time investment in eligible machinery
- • Must be MSE at inception
Existing Units
- • Replacing old/obsolete machinery
- • Adding new technology to existing setup
- • Must remain MSE after investment
Subsidy Benefits
CLCSS provides significant financial benefits to MSEs investing in technology upgradation:
Subsidy Structure
| Component | Details |
|---|---|
| Subsidy Rate | 15% of eligible investment in plant and machinery |
| Maximum Subsidy | ₹15 lakh per eligible enterprise |
| Maximum Loan | ₹1 crore for technology upgradation |
| Minimum Investment | No minimum specified (subject to loan eligibility) |
How Subsidy Works
Apply for Loan
MSE applies for term loan for eligible machinery at an eligible bank/FI
Bank Sanctions Loan
Bank sanctions the full loan amount (e.g., ₹50 lakh for machinery)
Bank Claims Subsidy
Bank claims 15% subsidy (₹7.5 lakh in this example) from SIDBI/NABARD
Subsidy Adjusted
Subsidy amount is credited upfront and loan liability reduced to ₹42.5 lakh
Benefits at a Glance
Reduced Loan Burden
15% upfront reduction in loan amount directly reduces EMI burden
Improved Cash Flow
Lower EMI improves monthly cash flow for the enterprise
Technology Access
Makes modern technology affordable for small enterprises
Competitive Edge
Improved productivity and quality enhance competitiveness
Eligible Machinery and Equipment
CLCSS covers specific machinery and equipment for technology upgradation. The eligible items vary by sector:
General Eligibility Criteria
- • Machinery must be for technology upgradation and modernization
- • Equipment should improve productivity, quality, or reduce costs
- • Must be new machinery (second-hand equipment not eligible)
- • Supplier must be eligible and registered under the scheme
- • Machinery should be part of approved sub-sectors list
Examples of Eligible Machinery by Sector
Textile Sector
- • Modern looms (airjet, waterjet, rapier)
- • Knitting machines
- • Dyeing and finishing equipment
- • CAD/CAM systems for design
Food Processing
- • Processing and packaging machinery
- • Cold storage equipment
- • Quality testing equipment
- • Pasteurization and sterilization units
Engineering
- • CNC machines
- • Precision measurement tools
- • Heat treatment equipment
- • Quality control systems
Supplier Requirements
The supplier of machinery must:
- • Be a registered manufacturer/dealer
- • Provide proper invoice with GST details
- • Give warranty on equipment
- • Be on the approved list (for some sectors)
Application Process
Follow these steps to apply for CLCSS subsidy:
Step 1: Identify Technology Need
Assess your current production process and identify machinery that can improve productivity, quality, or reduce costs.
Step 2: Get Machinery Quotations
Obtain detailed quotations from eligible suppliers for the machinery you need. Ensure the supplier is reputable and provides proper documentation.
Step 3: Prepare Project Report
Develop a detailed project report covering current operations, proposed technology, expected benefits, and financial projections.
Step 4: Approach Eligible Bank/FI
Contact any scheduled commercial bank, SIDBI, NABARD, or eligible financial institution. All PSBs and most private banks participate in CLCSS.
Step 5: Submit Loan Application
Submit the term loan application along with CLCSS-specific documents including machinery quotations and project report.
Step 6: Bank Processing
Bank evaluates your application, conducts technical appraisal, and sanctions the loan with CLCSS provision.
Step 7: Subsidy Claim by Bank
After loan disbursement, the bank claims the subsidy amount from SIDBI/NABARD on your behalf.
Step 8: Subsidy Adjustment
Subsidy amount is credited and adjusted against your loan account, reducing your liability.
Subsidy Calculation Examples
Here are examples of how CLCSS subsidy is calculated and applied:
Example 1: Small Investment
| Cost of Machinery | ₹20,00,000 |
| Loan Amount (100%) | ₹20,00,000 |
| CLCSS Subsidy (15%) | ₹3,00,000 |
| Net Loan Liability | ₹17,00,000 |
| Monthly EMI Savings | ~₹6,500 (approximate) |
Example 2: Maximum Subsidy Case
| Cost of Machinery | ₹1,00,00,000 |
| Loan Amount (100%) | ₹1,00,00,000 |
| Calculated Subsidy (15%) | ₹15,00,000 |
| Maximum Allowed | ₹15,00,000 |
| Net Loan Liability | ₹85,00,000 |
| Effective Benefit | Full 15% subsidy received |
Example 3: Investment Above Limit
| Cost of Machinery | ₹1,50,00,000 |
| Loan Amount Eligible for Subsidy | ₹1,00,00,000 |
| CLCSS Subsidy (15% of ₹1 crore) | ₹15,00,000 (Maximum) |
| Additional Self-Investment | ₹50,00,000 |
| Net Loan Liability | ₹85,00,000 |
Note: Investment above ₹1 crore is eligible for loan but subsidy is capped at ₹15 lakh
SIDBI Direct Assistance
In addition to bank refinance, SIDBI also provides direct assistance under CLCSS:
SIDBI Direct Lending
- • MSEs can approach SIDBI directly for term loans
- • Same 15% subsidy applies to SIDBI loans
- • Specialized schemes for specific sectors
- • Technical assistance for project evaluation
- • Flexible repayment terms based on project cash flows
How to Approach SIDBI
Online Application
Apply through SIDBI's online portal at www.sidbi.in
Branch Visit
Visit nearest SIDBI branch or SMILE (SIDBI Micro Finance) branch
Through NSIC
Approach National Small Industries Corporation for combined assistance