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Government contemplates CLCSS 2.0 scheme for technology upgradation of MSMEs

The Ministry of MSME is considering a new scheme in place of the recently closed CLCSS scheme. Credit Linked Capital Subsidy Scheme (CLCSS) was the flagship scheme of the Ministry to financially assist small and micro enterprises, to the extent of 15% of the cost of new plant and machinery, to adopt state of the art technology.

After running for nearly 20 years and supporting about  a lakh of units in modernization with a total grant of more than 8000 crores, the scheme has been recently wound up.  FISME led the MSME fraternity in appealing to the Government for continuation of the highly successful scheme. In response, the Ministry of Industry has informed their intention to start a new scheme and has requested suggestions from Associations on its framework.

The CLCSS scheme identified 51 sectors to support and the details of plant and machinery eligible for subsidy were also specified. This often made entrepreneurs in new sectors ineligible for assistance under the scheme as was the case with  entrepreneurs adopting efficient technologies but not listed.

So, towards hurdle free support to new technologies, Government should introduce online approval of the technologies under the new scheme. Instead of leaving the acceptance of applications under the scheme to Banks, all applications may be allowed to be submitted online where the efficacy and efficiency of the technologies proposed may be screened, online, by the departments and experts concerned.

This will obviate the physical meeting of the technology approval board which often delayed assistance to  entrepreneurs adopting newer technologies.

The new scheme intends to  put stress on  technology upgradation of the micro sector. While the intention is good, the ground situation is, most of the micro enterprises adopt locally fabricated machines with outdated technology as the state of the art equipment are neither affordable nor match with their scale of production. So how far the micro sector will be benefitted from the scheme and actually to what extent the technology may be upgraded remains a moot question.

Inclusion of Service sector is an appreciable step but may cause an enormous increase in applicants for assistance under the scheme. Past experiences show the CLCSS scheme was always crowded  with applications and entrepreneurs had to wait often for a year or more for release of the subsidy amount. So with the widened coverage Government should enhance allocation under the scheme substantially to cut down the unreasonable waiting period.

Ultimately, while MSMEs will surely welcome the announcement of the new scheme with open  arms, at the same time , they will expect an user friendly implementation, free from the glitches suffered by the superseded CLCSS.