CLCSS: Small businesses supported in FY21 under technology upgradation scheme highest in five years

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April 22, 2021 9:01 PM

Credit and Finance for MSMEs: Gujarat, Maharashtra, and Punjab were the states with the highest number of MSE beneficiaries under CLCSS. Overall, 45,214 MSE units were supported between FY17 and FY21 with Rs 3,139.21 crore of subsidy support.

Greater internet penetration has allowed even those in smaller towns to try their luck. Indeed, technology plays such a big role today that it’s the new-age discount brokerages that seem to be walking away with larger market shares.Greater internet penetration has allowed even those in smaller towns to try their luck. Indeed, technology plays such a big role today that it’s the new-age discount brokerages that seem to be walking away with larger market shares.

Credit and Finance for MSMEs: The number of micro and small enterprise (MSE) units supported under the government’s pet scheme to facilitate technology upgradation Credit Linked Capital Subsidy Scheme (CLCSS) has hit a five-year high during FY21. According to the available data from the MSME Ministry, the total number of MSE units supported under CLCSS during FY21 stood at 15,188 in comparison to 4,011 units supported in FY17 followed by 4,081 in FY18, 14,155 in FY19, and 7,779 in FY20. Moreover, the amount of capital subsidy support was also highest in FY21 at Rs 1,100.87 crore vis-à-vis Rs 256.53 crore subsidy support in FY17, Rs 260.54 crore in FY18, Rs 980.44 crore in FY19, and Rs 540.83 in FY20.

Number of MSE units supported under CLCSS (FY17-21)

Source: MSME Ministry Dashboard

“With a severe labour shortage across the nation, small businesses have made automation and technology adoption their top priority. While it’s heartening to see the growth in CLCSS subsidies but for India to achieve 50 per cent GDP from MSMEs ahead, it is highly imperative that the CLCSS scheme is expanded further to benefit more small businesses,” Vishal Devnath, Founder of SME-focused online investment bank SMERGERS told Financial Express Online.

Also read: RBI loan moratorium of little help for MSMEs as business recovery to repay remained low, say experts

The scheme intended to provide a capital subsidy of 15 per cent on institutional finance of up to Rs 1 crore availed by MSEs for upgradation of their plant and machinery with the latest technology. The government had updated the scheme in 2019 to boost credit access to MSEs along with a 10 per cent extra subsidy to SC/ST entrepreneurs beyond the existing 15 per cent subsidy. “In our National SC/ST Hub, there is a subsidy of 15 per cent up to a loan of Rs 1 crore for technology upgradation in CLCSS but we are also offering a 10 per cent extra subsidy that will be given to SC/ST entrepreneurs,” former MSME Secretary Dr Arun Kumar Panda had said during the relaunch of the scheme.

Gujarat, Maharashtra, and Punjab were the states with the highest number of MSE beneficiaries at 6,240, 2,873, and 1,605 respectively. Overall, 45,214 MSE units were supported between FY17 and 21 with Rs 3,139.21 crore of subsidy support. Importantly, digitisation of MSMEs has been among the vast untapped opportunities that startups have now been catering to. As a result, investment in startups focusing on enabling technology boost among MSMEs had shot up in 2020. According to a report titled India Impact Investment Trends by India Impact Investors Council (IIC), funding in such startups had jumped to $51 million across nine deals in 2020 from $6 million in 2019. The 2020 share was 16 per cent of the total tech investment in 2020 up from 3 per cent in 2019. The total investments stood at $331 million across 34 deals in 2020 in comparison to $188 million across 43 deals, according to the report. Among top startups, which focused on the SME technology sub-segment, raising capital in 2020 included PagarBook, FloBiz, and Salesken.

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