The Scheme aims at facilitating technology up-gradation by providing 15 per cent upfront capital subsidy up to a maximum cap of ₹ 15.00 lakhs (i.e., maximum investment in approved machinery is ₹ 1.00 crore) to MSE units including tiny, khadi, village and coir industrial units on institutional finance availed by them for induction of state-of-the-art or near state-of-the-art technology for up-gradation of the present technology level to a substantially higher one involving improved productivity, and/or improvement in quality of product and/or improved environmental condition including work environment. It would also include installation of improved packaging technique as well as anti-pollution measures, energy conservation machinery, in-house testing and on-line quality control.

Salient Features

The Credit Linked Capital Subsidy Scheme (CLCSS) was launched on 1st October, 2000. The Cabinet Committee on Economic Affairs (CCEA) has approved the changes in ceiling of credit from ₹ 40.00 lakhs to ₹ 1.00 crore with the rate of subsidy enhanced from 12% to 15% w.e.f. 29th September, 2005.


Presently, the Scheme facilitates subsidy to 51 sub-sectors/products including Khadi and Village Industries. As the Scheme progressed, the list of products/sub-sectors has been expanded by inducting new technologies/products/sub-sectors with the approval of the competent authority i.e., Technical Sub-Committee (TSC) and Governing and Technology Approval Board (GTAB) of the CLCSS.


At present, the Scheme is being implemented by 12 nodal banks/agencies including SIDBI and NABARD. Except SIDBI and NABARD, all the nodal banks/agencies would consider proposals only in respect of credit approved by their respective branches, whereas, for other Primary Lending Institutions (PLI) approved under the guidelines, SIDBI and NABARD would be the nodal agencies for release of subsidy under this Scheme. Online Application and Tracking System has been introduced w.e.f. 01.10.2013 and the SME units need to upload their subsidy claim application though their PLIs.

Procedural Aspects

This Scheme is linked with term loans availed by the MSEs from Banks or Financial Institutions. To claim subsidy under CLCSS, eligible MSEs are required to apply online through Primary Lending Institutions (PLIs), from where the MSEs availed term loan for up-gradation of technology. The completed application is being uploaded by PLI through Online Application and Tracking System to the attached Nodal Agency, which, in turn, recommends the application online to Office of DC (MSME) for release of subsidy. After processing of application and subject to availability of funds, due approval is accorded from competent authority and concurrence of Internal Finance Wing, after which funds are released to Nodal Agencies. Funds are then transferred by the Nodal Agencies to the PLIs where the account of the MSE is operated.

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