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Credit linked capital subsidy scheme

Topics Covered:

  1. Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

 

Credit linked capital subsidy scheme

 

What to study?

For Prelims and Mains: Key features, need and significance of the scheme.

 

Context: The Central government will continue the “Credit Linked Capital Subsidy and Technology Upgradation Scheme” for micro, small, and medium enterprises (MSMEs) beyond the 12th Plan period for three years from 2017-18 to 2019-20.

The Cabinet Committee on Economic Affairs has approved the continuation of the scheme with a total outlay of Rs 2,900 crore.

 

Credit Linked Capital Subsidy Scheme:

  1. The objective of the Scheme is to facilitate technology up-gradation in MSMEs by providing an upfront capital subsidy of 15 per cent (on institutional finance of up to Rs 1 crore availed by them) for induction of well-established and improved technology in the specified 51 sub-sectors/products approved.
  2. The major objective is to upgrade their plant & machinery with state-of-the-art technology, with or without expansion and also for new MSEs which have set up their facilities with appropriate eligible and proven technology duly approved under scheme guidelines.
  3. The Scheme is a demand driven one without any upper limit on overall annual spending on the subsidy disbursal.

 

Nature of assistance:

The revised scheme aims at facilitating technology up-gradation by providing 15% up front capital subsidy to MSMEs, 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.

 

Mains Question: Analyze whether the slew of measures meant to aid the MSME sector to address their woes have come too little too late?