Home  >  Resources  >  Blog  >  CLCSS Scheme – Full Form, Incentive, Criteria for Qualification, and Documents

CLCSS Scheme – Full Form, Incentive, Criteria for Qualification, and Documents

Posted on
Aug 23, 2023

Overview and Features of the CLCSS Scheme

In India, we understand that a lack of funds can sometimes hold back MSMEs, leading them to work with outdated technology. But the CLCSS (full form: Credit Linked Capital Subsidy Scheme) is here to provide upfront capital and financial support subsidies to Small Scale Industries (SSIs) operating in both rural and urban areas. The primary goal of CLCSS is to upgrade the technology and production equipment used by SSIs, empowering them to thrive in today’s competitive market. 

One of the best things about the CLCSS scheme is that it caters to businesses of all sizes. Whether you are a well-established MSME or a new startup, as long as you meet the CLCSS criteria, you can avail yourself of the benefits.

The objectives of this scheme are crystal clear. It aims to facilitate technology upgradation by providing a generous 15% upfront capital subsidy, up to a maximum cap of ₹15 lakhs (for investments of up to ₹1 crore in approved machinery). This subsidy is available to MSE units, including tiny, khadi, village, and coir industrial units, when availing institutional finance for adopting state-of-the-art technology.

Applying for working capital loans and unsecured business loans from banks is now easier than ever. The CLCSS streamlines the process and you can even use a business loan interest rate calculator to estimate your monthly payments. The upgraded technology should result in improved productivity, better product quality, and a more favourable work environment. It can also cover investments in improved packaging techniques, anti-pollution measures, energy conservation machinery, in-house testing, and online quality control.

Here is the performance of the CLCSS in previous years:

Year  No. of MSE Beneficiaries Total Amount of subsidy released ( crore) 
2016-17 4,011 256.5306   
2017-18 4,081   260.5416
2018-19  14,155   980.4406
2019-20 7,840 546.7421 
2020-21  15,213 1,102.5721      
2021-22 1,800  106.6286  

Salient Features of the CLCSS Scheme

Here are some of the key points you need to know about the CLCSS scheme:

  • The government initiated the CLCSS to provide financial assistance for upgrading machinery in enterprises starting from 1st October 2000.
  • The Cabinet Committee on Economic Affairs (CCEA) approved significant changes to the scheme on 29th September 2005. The government increased the credit ceiling from ₹40 lakhs to ₹1 crore and enhanced the subsidy rate from 12% to 15%.
  • Businesses investing in specific machinery will gain up to 15% subsidy, with a maximum limit of ₹1 crore.
  • To be eligible for the CLCSS subsidy, enterprises must have availed of a term loan from an approved list of financial institutions for purchasing machinery.
  • The scheme also supports businesses transitioning from small to medium scale by availing of business loans.
  • Entrepreneurs belonging to the SC/ST category and operating in selected districts of Northeast India or hilly terrains can avail of an additional 10% subsidy under the revised CLCSS scheme.
  • 12 nodal agencies oversee the CLCSS, including prominent banks like Bank of India, State Bank of India, Bank of Baroda, and others, along with institutions like Small Industries Development Bank of India (SIDBI) and National Bank for Agriculture and Rural Development (NABARD).
  • This scheme aims to boost industrial growth, empower entrepreneurs, and foster economic development. So, if you have invested in machinery and meet the eligibility criteria, don’t miss the opportunity to take advantage of the CLCSS subsidy to propel your business forward!

Benefits of the CLCSS Scheme

  • Generous Subsidy: One of the most significant advantages of the CLCSS scheme is that it provides a 15% subsidy on your purchase of advanced technology. This means your small business loan burden decreases considerably, making it easier for you to invest in cutting-edge equipment and machinery.
  • Enhanced Efficiency, Reduced Costs: Embracing modern technology not only boosts your overall efficiency but also lowers production costs. As a result, you can maximize your profits while maintaining the quality of your products.
  • Global Competitiveness: Gone are the days when only large industries could compete on a global scale. The CLCSS scheme enables micro, small, and medium enterprises to manufacture high-quality products that meet international standards. This opens up new doors for you to expand your business beyond national borders.
  • Empowering Rural Industries: The positive impact of this scheme extends beyond individual businesses. With the growth of rural industries, employment opportunities multiply, and the standard of living for local communities improves significantly. The ripple effect of your technological upgrade reaches far and wide.
  • Easy Application Process: Applying for the CLCSS scheme is a straightforward process. You can access the necessary information and submit your application without any hassle.

Eligibility for Business Loans

  • If your business falls under any of the eligible sectors and meets the criteria, you have a great opportunity to enhance your small-scale business with financial support from the government through the CLCSS scheme.
  • The Credit Linked Capital Subsidy Scheme offers a 15% capital subsidy – up to ₹1 crore – to SSI units dealing with specified products or sub-sectors.
  • Eligible businesses can invest in plant and machinery, tools and techniques, modern technology, and other amenities to upgrade their small-scale operations.
  • The scheme requires projects to have already received sanctioned term loans from Primary Lending Institutions (PLIs).
  • If your industry has transitioned from Small Scale to Medium Scale, you can still apply for the subsidy.
  • The nodal agency might not link the CLCSS scheme to any sort of refinancing scheme.
  • The subsidy considers industries falling under labour-intensive and export-wise sectors.
  • The Ministry of Micro, Small & Medium Enterprises has identified 51 sectors and sub-sectors that qualify for the CLCSS subsidy. Some sectors covered under the scheme include: 
    • Drugs and Medicines – Pharmaceuticals
    • Toys
    • Sports goods
    • Electronic equipment
    • Welding electrodes
    • Mineral water
    • Glass and Ceramic accessories
    • Fans and the motor industry
    • General lights services
    • Stone Industry
    • Dyes
    • Medicinal and Aromatic Plants
    • Mineral sheaths
    • Biotech industries
    • Poultry equipment
    • Bicycle parts
    • Industrial gases
    • Electrical Accessories
    • Engineering works
    • Leather
    • Coir products
    • Wires and cables
    • Auto part
    • Zinc sulfate
    • Combustion appliances
    • Rubber processing
    • Steel furniture
    • Wooden Furniture
    • Other control and supervision accessories
    • Communication tools
    • Beneficiation of Graphite and Phosphate
    • Printing
    • Gold plating
    • Steel Re-rolling and Pencil ingot making sector
    • Khadi and village sector
    • Sewing machines
    • Machine tools
    • Agricultural equipment
    • Pant and other varnishing products
    • Locks
    • Cosmetics
    • Information Technology – Hardware
    • Food processing
    • Garments – readymade
    • Steel and iron foundries
    • Nonferrous foundries
    • Hand tools and forging
    • Plastic components

You can avail of the benefits of CLCSS if your company falls under any of the following business structures:

  • Sole Proprietary: If you are the sole owner of the business and operate it as an individual.
  • Partnership Firm: If your business is a legal association of two or more individuals who come together to carry out a business and share the profits and losses.
  • Limited Liability Firm: If your business is a separate legal entity, where the liability of the members or shareholders is limited to the extent of their share in the company’s capital.
  • Private Limited Company: If your business is a separate legal entity with a minimum of two shareholders and a maximum of 50, offering limited liability protection to its owners.

Documentation for the CLCSS Scheme

The key to successfully enrolling for government schemes is documentation, and the same applies to the CLCSS scheme as well. To avail of the benefits, you need to follow these simple steps and provide the following documents for verification:

  • Identity Proof: Submit your Aadhaar card, PAN card, voter’s ID, or any other valid identity proof.
  • Address Proof: Provide a voter’s ID, Aadhaar card, passport, or any other document that verifies your address.
  • Business Address Proof: Submit valid proof of your business address.
  • Business Proof: Provide documents that validate your business, its existence, and operations.
  • PAN Card: Include the PAN card of your business entity.
  • Passport-Size Photographs: Submit recent passport-size photographs of yourself.
    In addition, you should be ready to furnish any other necessary KYC (know your customer) paperwork to ensure you can avail of the benefits of the CLCSS scheme.

Remember, timely submission of these documents is crucial to initiate the verification process and secure the subsidy offered under the CLCSS scheme. For more details and to apply for the CLCSS scheme extension, check out the official website or contact the concerned authorities. 

How to Apply for Business Loan: A Step-by-Step Guide

By following these simple steps, you can successfully apply for the CLCSS scheme and avail of its benefits:

Step 1: Begin your application process by approaching a listed financial institution.

Step 2: Once you avail of a term loan for upgrading your technology from the bank or financial institution, you can claim the subsidy under the CLCSS scheme.

Step 3: To apply for the subsidy, you must go online and access the official website of the Ministry of Micro, Small and Medium Enterprises.

Step 4: Log in using your user ID and password on the website.

Step 5: On the User Task menu, click on the ‘Apply for Subsidy’ link.

Step 6: Provide all the necessary details as required to proceed with the application.

Step 7: Fill out the application form, including specific information about the machinery or equipment for which you are seeking the subsidy.

Step 8: Verify all the details you have entered and then submit the application form.

Step 9: After submission, your application will undergo a thorough review. If you have any queries or require clarifications, they will reach out to you accordingly.

Step 10: The nodal verification process will then take place to evaluate your eligibility, urgency, and availability of funds for loan sanction.

Step 11: Once your application clears, you can track its status online or get in touch with the concerned nodal officer for updates.

Step 12: After we sanction the subsidy, we will transfer the funds to the respective nodal agency.

Step 13: Finally, the financial institution where you hold an account will disburse the funds.

Ready to take your small business to the next level? Unlock the potential of your company with FlexiLoans today! Experience the power of FlexiLoans’ hassle-free msme business loan solutions and visit our website – FlexiLoans – to secure the financial support you need to fuel your business growth.

Application for the CLCSS Scheme

  • Applying for a subsidy under the CLCSS scheme is now easier than ever with the Online Application and Tracking System, introduced on 1st October 2013. To begin, you, as the applicant, need to approach the Primary Lending Institution responsible for providing the term loan.
  • Once you submit your application for the subsidy directly to the PLI, they will upload it and forward it to the Nodal Agency. The Nodal Agency plays a crucial role as it recommends the subsidy’s disbursal to the Office of DC (MSME).
  • Your application will then undergo processing and approval by the Competent Authority, in consultation with the Internal Finance Wing.
  • Once the Nodal Agency obtains all the necessary approvals, they will grant the subsidy to the PLI, who will then provide you with the term loan along with the approved subsidy. This way, you can make the most of the CLCSS scheme, boosting your MSME business without any hassle.

Subsidies Under the CLCSS Scheme

You can avail of various subsidies under the CLCSS scheme to boost your MSME business. Let’s explore some of the key ones:

1. ZED – Zero Defect Zero Effect Scheme: This scheme aims to enhance production efficiency, and promote environment-conscious outputs and ZED production processes. It focuses on reducing waste, improving productivity, and fostering market growth through innovative techniques and equipment.

2. Assistance for Entrepreneurial and Managerial Development of MSMEs via Incubators: This CLCSS subsidy encourages innovation and adoption of cutting-edge technology in MSMEs. It empowers entrepreneurs to strategize and implement business plans, giving technology a pivotal role in their growth.

3. Digital MSME: This helps firms embrace digital transformation with cloud-based services tailored to meet the unique needs of the MSME sector.

4. IPR – Intellectual Property Rights: By promoting an entrepreneurial ecosystem, this CLCSS subsidy contributes to the country’s long-term economic growth and elevates global standards in the technological domain.

5. Lean Manufacturing: This subsidy enables MSMEs to overcome competitiveness challenges and ensures survival in the market by adopting lean manufacturing practices. This approach aids in cost reduction while boosting productivity and overall competitiveness.

6. Design: This CLCSS subsidy helps firms seek professional guidance from the domestic manufacturing industry and design community to address design-related challenges. This leads to continuous improvement and value-added processes for both existing and new products.

7. CLCSS Technology Upgradation Plan: MSMEs with a valid UAM Number/Udyam Registration Number can benefit from this CLCSS subsidy by receiving a capital subsidy of 15% – up to ₹1 crore – to upgrade their technology. The scheme is demand-driven and there is no upper limit on the total amount of subsidies granted annually.

These subsidy schemes are designed to empower MSMEs, promote innovation, and drive overall economic growth. Embrace the opportunities they offer to take your business to new heights.

FlexiLoans: Your Partner in Business Growth

Are you a small or medium-sized enterprise seeking financial support to fuel your business growth? Look no further than FlexiLoans! We are an Indian fintech company dedicated to empowering SMEs with accessible and hassle-free loan solutions through our cutting-edge online platform.

At FlexiLoans, we understand the unique challenges faced by small businesses when it comes to securing traditional bank loans. That’s why we offer a flexible and efficient borrowing process designed to cater to the specific needs of SMEs. Say goodbye to lengthy approval procedures and stringent collateral requirements.

Why is FlexiLoans the ideal choice for SMEs? Firstly, our user-friendly platform allows for a quick and seamless business loan application process. Secondly, we consider various factors beyond just credit history, giving deserving businesses a fair chance. Thirdly, our competitive interest rates ensure that repayment remains manageable, supporting your business growth without undue financial stress. Don’t let funding constraints hold your business back.

Visit our website today!


Q 1: When was the CLCSS launched and is it still operational?

A: The CLCSS scheme came into existence in the fiscal year 2000-2001 and remained active until 31st March 2017. Applications for subsidies through online or web tracking systems beyond that date became void.

However, the central government later decided to continue the Credit Linked Capital Subsidy Scheme (CLCSS) component of the Credit Linked Capital Subsidy and Technology Upgradation Scheme (CLCS-TUS) from 1st April 2017 until 31st March 2020 or until the approved limit for the aggregate capital subsidy disbursed reached ₹2,360 crores, whichever came earlier. The most recent government update on the CLCSS scheme came in December 2019.

Q 2: What does technology upgradation mean?

A: Under the CLCSS scheme, technology upgradation refers to the process of transitioning from existing or outdated technology to newer and more efficient technologies. The goal is to help MSMEs improve production processes, achieve cost savings, and enable them to scale up effectively.

Q 3: What is the present revised rate under the CLCSS scheme?

A: The current revised scheme under CLCSS offers a maximum loan limit of ₹100 lakhs for eligible applicants. The subsidy is calculated based on either ₹15 lakhs (minimum) or 15% of the total, whichever amount is lower.

Q 4: What is the period of commercial production required to avail of a subsidy under the CLCSS scheme?

A: To be eligible for a subsidy under the Credit Linked Capital Subsidy Scheme (CLCSS), businesses must have been in commercial production for a minimum period of 3 years.

Q 5: Which are the Nodal Agencies that oversee the distribution of subsidies under the CLCSS scheme?

A: The following Nodal Agencies oversee the distribution of subsidies under CLCSS:

1. SIDBI (Small Industries Development Bank of India)

2. NABARD (National Bank for Agriculture and Rural Development)

3. Indian Bank

4. Bank of India

5. State Bank of Bikaner and Jaipur

6. Bank of Baroda

7. Canara Bank

8. Corporation Bank

9. State Bank of India

10. Andhra Bank

11. Punjab National Bank

12. Tamilnadu Industrial Investment Corporation.

Q 6: I am currently availing of a technology upgradation subsidy provided by the state government. Can I apply for a CLCSS subsidy as well?

A: No, if you are already availing of a technology upgradation subsidy from the Central/State/UT Government, you are not eligible to apply for a subsidy under CLCSS. However, there are exceptions for cases covered under the National Equity Fund (NEF) Scheme and units in the Northeastern region, as they can still be eligible under CLCSS.

Q 7: In what case can a commercial producer benefit from the CLCSS subsidy?

A: After installing eligible plant and machinery, a Micro, Small, or Medium Enterprise (MSME) must remain in commercial production for a minimum of 3 years to qualify for a subsidy under CLCSS. The subsidy amount will be held in Term Deposit Receipts (TDRs) by the Principal Lending Institution in the account of the concerned MSME for these 3 years. Once the MSME fulfils the requirement of regular instalment payments, they will receive the TDR in their account.

Q 8: What are the consequences of CLCSS for units availing of subsidies under this scheme?

A: Units availing of subsidies under the CLCSS scheme will not be eligible for additional subsidies for technology upgradation as per the prevailing laws. However, units in the Northeastern region may benefit from both the CLCSS subsidy and other applicable subsidies.

Q 9: Can the lending agency set conditions to ensure that CLCSS funds are utilized for optimal management?

A: Yes, the lending agency holds the authority to establish conditions to guarantee the utilization of the CLCSS funds for optimal management. In case an applicant provides false information, the lending agency can also revoke the sanction of funds.

Q 10: What support is available for technology upgradation under CLCSS?

A: The Ministry of Micro, Small & Medium Enterprises has implemented the CLCSS scheme to support technology upgradation for MSMEs in the country. Under this scheme, eligible firms can receive a capital subsidy of 15% of the investment cost, or up to a maximum of ₹15 lakhs (previously 12%; limited to ₹4.8 lakhs before 29th September 2005), to upgrade their technology to well-established and improved technologies approved under the scheme.

The CLCSS covers 48 products/sub-sectors. To avail of this support, companies manufacturing products and intending to upgrade their manufacturing technology can approach the Nodal Agencies or eligible financial institutions for the sanction of a term loan to purchase eligible machinery.

Check out more Government Schemes 

MSME Loan Schemes in India

Savings Schemes in India

PMEGP Scheme/Loan

SATAT Scheme

Startup India Scheme

Jan Samarth Scheme

Cent Kalyani Scheme

RoDTEP Scheme

Stand Up India Scheme

MIS Scheme

Schemes Of The NSIC

SIDBI Scheme

PMRY Scheme

PM SVANidhi Scheme

PLI Scheme

EMI Calculators And Business Loans: Facts And Myths

EMI Calculators and Business Loans – Facts and Myths


SFURTI Scheme: Full Form, Guidlines, Funding Detail, Who Can Apply?

Next Blog