Credit Linked Capital Subsidy for Technology Upgradation


Technology upgradation would ordinarily mean induction of state-of-the-art or near state-of-the-art technology. In the varying mosaic of technology obtaining in more than 7,500 products in Indian small scale sector, technology upgradation would mean a significant step up from the present technology level to a substantially higher one involving improved productivity, and/or improvement in quality of products and/or improved environmental conditions including work environment for the unit. It includes installation of improved packaging techniques as well as anti-pollution measures and energy conservation machinery. Further, units in need of introducing facilities for in-house testing and on-line quality control would qualify for assistance, as the same are a case of technology up-gradation.

Replacement of existing equipment/technology with same equipment/ technology will not qualify for subsidy under this scheme, nor would the scheme be applicable to units upgrading with second-hand machinery.

 Nature of assistance

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

Revised CLCS has been amended as follows:

(a) Ceiling on loans under the scheme has been raised from Rs.40 lakh to Rs.1 crore

(b) Rate of subsidy has been enhanced from 12% to 15%.

(c) Admissible capital subsidy is calculated with reference to purchase price of plant and machinery, instead of term loan disbursed to the beneficiary unit.

(d) Practice of categorisation of SSI units in different slabs on the basis of their present investment for determining eligible subsidy has been done away with; and

(e) Operation of the scheme has been extended up to 31st March, 2007. The above revisions/amendments are effective from September 29, 2005.

 Who can apply

Eligible beneficiaries include sole proprietorships, partnerships, co-operative societies, and private and public limited companies in the SSI sector. Priority shall be given to woman entrepreneurs.

 How to apply

Candidates meeting the eligibility criteria may approach all scheduled commercial bank, scheduled cooperative bank [including urban cooperative bank co-opted by SIDBI under Technological Upgradation Fund (TUF)], Regional Rural Bank (RRB), State Financial Corporation (SFC) and North-Eastern Development Financial Institution (NEDFi).