Credit Linked Capital Subsidy for Technology Upgradation

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What is Technology Upgradation?

In most cases, technological upgradation would imply the incorporation of cutting-edge or near-cutting-edge technology. Technology upgradation would imply a significant step up from the current technology level to a significantly higher one involving improved productivity, and/or improvement in product quality, and/or improved environmental conditions including work environment for the unit in the varying mosaic of technology obtaining in more than 7,500 products in the Indian small scale sector. It entails the installation of superior packing techniques, anti-pollution measures, and energy-saving technology. Furthermore, units in need of implementing facilities for in-house testing and on-line quality control would be eligible for help, as this is an example of technology advancement.

This programme does not apply to units that replace existing equipment/technology with the same equipment/technology, nor does it apply to units that upgrade with second-hand machinery.

About the Credit Linked Capital Subsidy Scheme for Technology Upgradation

The Scheme’s goal is to facilitate technology upgradation in MSEs by offering a 15% upfront capital subsidy (on institutional funding of up to Rs 1 crore availed by them) for the induction of well-established and enhanced technology in the 51 designated sub-sectors/products. In other words, the main goal is to modernise their equipment and machinery with cutting-edge technology, with or without growth, and for the new MSEs that have established their facilities with appropriate eligible and proven technology that has been duly approved under scheme standards. The list of technologies is available on the website

The Scheme is demand-driven, with no upper limit on total yearly spending on subsidy disbursement.

Nature of Assisstance

The revised scheme aims to facilitate technology upgradation by providing SSI units, including tiny, khadi, village, and coir industrial units, with a 15% up-front capital subsidy on institutional finance obtained for the induction of well-established and improved technologies in specified sub-sectors/products approved under the scheme.

The revised CLCS now reads as follows:

(a) The scheme’s loan limit has been raised from Rs.40 lakh to Rs.1 crore.

(b) The subsidy rate has been increased from 12% to 15%.

(c) Admissible capital subsidy is determined using the purchase price of plant and machinery rather than the term loan provided to the recipient unit.

(d) The practise of categorising SSI units into different slabs based on their current investment in order to determine eligible subsidy.

(e) The scheme’s operation has been extended till March 31, 2007. The aforementioned revisions/amendments take effect on September 29, 2005.

Eligibility Criteria

  • Any Micro and Small Enterprise (MSE) with a valid Udyam Registration and access to institutional finance can purchase new plant and machinery approved under the scheme.
  • SC/ST, Women, NER / Hill States / Aspirational Districts /LWE Districts are eligible for special benefits. The subsidy must be available for investment in the acquisition/replacement of plant and machinery/equipment and any type of technology up-gradation (Core plant & Machinery). Secondhand and fabricated items are not eligible.

How to apply for the Scheme

Applicants who match the qualifying criteria should go to a loan lending bank branch or a PLI. The lending bank branch will analyse and apply for subsidy claims on behalf of the applicant using a dedicated online application and tracking management System (MIS), and the application will be routed to the Ministry via nodal banks / agencies. SIDBI, NABARD, SBI, BoB, Andhra Bank (Merged with UBI), and Corporation Bank are among them (Merged with UBI).

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