The Government today approved continuation of the credit-linked capital subsidy scheme (clcss) for micro & small enterprises during 11th Plan. The Cabinet Committee on Economic Affairs (CCEA) gave its approval here today.

The ministry of micro, small and medium enterprises has been operating for facilitating the upgradation of small scale industries under which 15 per cent capital subsidy on the institutional finance was provided in specified sub-sectors / products for induction of well established and improved technologies approved under the scheme.

The validity of this scheme was up to 31 March 2007, which marked the end of 10Th five year plan. During initial period of five years, very few units could avail the advantage of the scheme. Therefore, the scheme was modified and made more attractive by increasing the rate of subsidy from 12 per cent to 15 per cent and raising the ceiling of loan from Rs40lakh to Rs1.00crore in September 2005.

The period of validity, which was due to have expired on 30 September 2005 was accordingly extended up to 31 March 2007.

Consequently, the scheme became popular among micro and small enterprises with about 2400 units availing financial assistance by way of term loans aggregating approximately Rs727 crore from the financial institutions and utilising a subsidy of approximately Rs80 crore under the scheme in one-and-a-half years of its operation.

In addition, about 2400 more units have already obtained financial assistance of about Rs833 crore and are awaiting subsidy clearance of about Rs115 crore. In view of the response to the scheme, the ministry of micro and small enterprises has taken the initiative to extend the period of validity of this subsidy scheme to the 11Th plan period.

With the extension of the CLCSS during 11th five-year plan period, ministry of micro, small and medium enterprises says  these enterprises will be able to modernise their plants and machineries and upgrade their technologies to maintain a competitive edge and generate employment.