How Credit Linked Capital Subsidy Can Make Your Business Loan More beneficial

If you're an MSME in India planning to upgrade your machinery or adopt better tech, don’t just take a loan—take advantage of a government-backed capital subsidy that can instantly reduce your financial burden. Through the Credit Linked Capital Subsidy Scheme for Technology Upgradation (CLCS-TU), you can get up to ₹15 lakh as a direct subsidy on eligible loans. But this isn’t a scheme you stumble into. You need to plan it smart.

What is CLCS-TU and Why It Matters

CLCS-TU is a central government scheme offering a 15% capital subsidy (up to ₹15 lakh) on new term loans used for upgrading existing machinery or technology. The scheme covers 51 industry sub-sectors including food processing, textiles, auto components, khadi, and coir.

The goal: Help small enterprises adopt state-of-the-art or near state-of-the-art technologies that improve productivity, quality, or environmental performance.

But here's the catch: Most eligible businesses don’t even apply. Either they find out too late, or banks don’t guide them through the process. That’s money left on the table.

Eligible Loan Types

Only term loans taken for purchasing eligible machinery or upgrading technology qualify. Working capital loans or loans used for land or civil works are not eligible. The loan must be fresh and linked to a subsidy application at the time of sanction, not after disbursal.

How the Numbers Work

• If you take a ₹1 crore term loan for eligible machinery
• You get 15% (₹15 lakh) as subsidy
• This amount is directly deducted from your loan principal or adjusted in EMI

That’s ₹15 lakh you never repay. It’s not a tax benefit or reimbursement—it’s upfront support. Used right, it can unlock better machinery, better credit terms, and faster break-even.

Why Most MSMEs Miss Out

Many business owners either:

• Take a regular machinery loan without knowing this exists
• Find out later when the loan is already disbursed (too late to apply)
• Skip it due to complex documentation or unclear bank guidance

And that’s a missed strategic advantage.

How StartupFlora Helps You Tap This Scheme

We don’t just inform you about the scheme—we help you integrate it into your loan strategy. Here’s how:

1. Pre-loan planning
We help you select machinery that fits both your business goals and the subsidy criteria.

2. Choosing the right lender
Not all banks process this scheme correctly. We guide you to approved institutions (like SIDBI, NABARD, or partner banks).

3. Documentation and tracking
We handle the paperwork, ensure it's uploaded correctly via the official CLCSS portal, and follow through till the funds hit your loan account.

4. Post-approval guidance
Whether you want to scale, plan a second subsidy cycle, or negotiate better terms with lenders—we’re in your corner.

FAQs: Credit Linked Capital Subsidy Scheme

Is this available for loans I already took?
No. Only new term loans are eligible. The subsidy must be applied at the time of loan sanction.

How much can I get?
15% of the machinery cost, capped at ₹15 lakh per loan.

Can I use this for buying used equipment?
No. Only new, approved machinery qualifies.

Who applies for the subsidy?
Your bank submits the application to a nodal agency. You need to push for it at the time of loan application.

Is this limited to manufacturing units?
No. Any MSE in an eligible sub-sector planning tech upgrades can apply, including khadi, coir, and village industries.

Final Word

This isn’t just a scheme—it’s a chance to upgrade faster, reduce financial pressure, and stay competitive. If you’re taking a term loan and not aligning it with CLCS-TU, you’re leaving real money behind.

StartupFlora helps MSMEs turn subsidies into growth levers. From bank coordination to machinery planning—we handle the backend so you can focus on building your business.

Need help claiming this subsidy? Our scheme expert will guide you one-on-one.

[Book your free call now]
Or leave your number, and we’ll get in touch within 24 hours.