Every business aspires to modernize itself. The only hindrance in majority of the cases is shortage of capital. This is where the Credit Linked Capital Subsidy Scheme comes into picture.


The Credit Linked Capital Subsidy Scheme offers subsidy on the loan taken or cost of equipment, whichever is lower. There are 51 different sub-sectors where this scheme is applicable, covering a multitude of equipment.


How does an MSME benefit from this scheme?

  1. An MSME receives capital subsidy on institutional loans
  2. An MSME receives 15% subsidy on loan taken for technological up-gradation. The ceiling on loan allowed is ₹1 Crore
  3. An MSME can avail up-gradation of production equipment

Eligibility Criteria:

What is the eligibility criteria for this scheme?

  1. Existing as well as new MSMEs can apply for this scheme
  2. MSEs can also apply for the subsidy. They must do so within three years of graduating from Small to a Medium Scale Enterprise
  3. The following are the eligible beneficiaries listed under this scheme with priority given to women entrepreneurs:
  • Sole Proprietorship
  • Partnerships
  • Co-operative societies
  • Private and Public limited companies
  1. The following are the eligible Prime Lending Institutions listed under this scheme:
  • Scheduled Commercial Banks
  • Scheduled Cooperative
  • Regional Rural Banks
  • State Financial Corporation

Note: All the above institutions are eligible as PLI only after they execute a General Agreement with any of the nodal agencies, i.e., SIDBI and NABARD.



How can an MSME apply for this scheme?

  1. An MSME that wishes to upgrade its equipment and technology, would have to approach the concerned bank/nodal agency. Concerned Bank/PLI will upload the online application of CLCSS and forward it to their Nodal Bank. The Nodal Bank will forward the same to the Office of DC (MSME) after scrutiny
  2. MSMEs cannot directly apply, but their banks will forward their application to office of Development Commissioner
  3. The application for subsidy should be filled latest by the quarter ending after paying the last installment of term loan. For example, if the payment date is falling between 1st January, 2015 to 31st March, 2015 the claim should be forwarded latest by June, 2015 to Office of DC (MSME)
  4. The subsidy will be kept in the form a term deposit for three years in the bank by the Office of DC (MSE). The beneficiary unit shall remain in commercial production for a period of at least three years after installation of eligible plant & machinery on which subsidy under CLCSS has been availed. If the unit fulfills the condition, the term deposit will be transferred to the unit’s account after three years

Interested participants can view the form here

For more details on this scheme, click here.

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