The Hindu Business Line : Modified tech upgradation scheme for SSIs soon

Coimbatore April 24 The credit linked capital subsidy scheme (CLCSS) drawn by the Small Scale Industries Ministry to assist the technology upgradation of SSI industry appears headed for a revamp as the Union Government is expected to reintroduce a modified scheme any time now.

The SSI sector's confidence on getting the CLCSS tenure extended is borne out of the fact that a vast chunk of the CLCSS corpus remains under-utilised during the nearly seven years of the scheme operation.

According to official data on CLCSS, as on March 31, 2007, the total amount utilised on all-India basis by the SSI industry under the CLCSS for updating technology is about Rs 100 crore against the total CLCSS corpus of Rs 600 crore sanctioned by the Government.

The lack of awareness on the existence of the CLCSS among the targeted SSI units and also to some extent among the bankers who are to extend the credit for the SSI units modernisation projects is cited by the industry as the reason for the lower utilisation of the funds sanctioned by the Centre under the CLCSS in its earlier avatar.

Realising the need to reach the scheme to as many SSI clients as possible, the Government during the beginning of 2006 brought in more commercial banks into the CLCSS operation by designating them as nodal agencies. Prior to that, the SIDBI was the only nodal agency recognised for the CLCSS running.

The CLCSS was first introduced in 2000 to assist the technology upgradation for the units in the SSI sector. Pending the revamp of the scheme, the Centre has now kept the CLCSS in abeyance with the scheme tenure, including the extended two-year period having come to an end by March 31, 2007.

"The lower fund utilisation is apparently due to lack of awareness on the scheme operation. Since the Government is likely to give new lease of life to the CLCSS by according another extension, we want to spread the awareness among the SSI entrepreneurs who can take advantage of the scheme for updating their technology," said Mr Muthusamy, President, Coimbatore District Small Scale Industries Association (Codissia).

The Tamil Nadu-based SSI units, according to the Codissia, are the major beneficiaries of the CLCSS both in terms of the number of units that availed themselves the scheme (24 per cent) and in total CLCSS fund disbursal (30 per cent).

The CLCSS was originally introduced in 2000 to facilitate technology upgradation for SSI with a provision to offer upfront capital subsidy of 12 per cent for which the loan ceiling was kept at Rs 40 lakh (for plant and machinery). But the scheme was amended in 2005 that saw the loan ceiling being enlarged to Rs 1 crore and the subsidy from 12 per cent to 15 per cent.

One of the major changes effected in the amended CLCSS was linking the capital subsidy claims with the investments on plant and machinery (specific technology related), instead of the earlier system of loan-linked subsidy.