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Govt launches updated Credit linked Capital Subsidy Scheme for MSMEs

he government on Thursday launched the updated Credit linked Capital Subsidy Scheme (CLCSS) to allow micro, small and medium enterprises (MSMEs) access to capital.

MSME Minister Nitin Gadkari announced the government would prepare a final report on the recommendations of the U K Sinha committee, which had been set up by the Reserve Bank of India (RBI) to suggest expeditious ways to strengthen MSMEs, within the next eight days.


Gadkari said the CLCSS scheme would be crucial in raising MSME contribution to gross domestic product from the current 29 per cent to 50 per cent, in addition to increasing exports from the sector to 50 per cent from 40 per cent now.

The scheme provides an upfront subsidy of 15 per cent on institutional credit up to Rs 1 crore for MSMEs in the specified 51 sub-sectors.

In February, the Cabinet Committee on Economic Affairs approved an outlay of Rs 2,900 crore for the scheme. Now, it is a demand-driven one without any upper limit on overall annual spending on the subsidy disbursal, a senior official said. In the relaunched scheme, there is an additional 10 per cent subsidy for SC-ST entrepreneurs while special provisions have been made for 117 'aspirational' districts, hill states and the northeastern region.

Delayed payments

Gadkari also said a committee was being set up under the MSME secretary to look into the issue of delayed payments. The finance ministry estimates that public sector undertakings owe MSMEs above Rs 48,000 crore.

The government is brainstorming ways to improve the TReDS (Trade Receivables Discounting System) platform and the online bill discounting platform, which helps MSMEs raise funds by selling their trade receivables to corporates. Suggestions include expanding the number of exchanges allowed on TReDS and connecting it with the government e-marketplace platform, the government's chief public procurement portal.