Credit Linked Capital Subsidy Scheme

There exists a credit linked capital subsidy scheme for technology up gradation for Small Scale Industries. The scheme is implemented through Development Commissioner (Small Scale Industries), SIDBI and NABARD.

The Scheme has been recently revised by which credit limit has been increased to a maximum of Rs. One Crore with a subsidy of 15%. In the revised scheme equipments required for schedule ‘M’ compliance have also been included for the pharmaceutical sector. This include air handling systems , air conditioning , de-humidifies , laminar flow benches, hepa and absolute filters etc.

The capital subsidy scheme works in coordination with a credit Guarantee Fund Scheme for small industries. Under this scheme a Credit Guarantee Fund Trust for small scale industries ( CGSTI ) is managed by the Board of Trustees. CGTSI provides guarantees to a substantial extent in respect of credit facilities to the borrowers in the small scale sector without any collateral security and / or third party guarantees. The scheme covers term loans and working capital facility both.

Thus under this scheme an eligible borrower may approach an eligible institution for a credit facility under the scheme. The eligible institution extending the credit, shall not ask from the borrower for any collateral security and/or third party guarantee but shall approach CGTSI and shall enter into an agreement to provide a guarantee on account of the same credit. This arrangement requires a payment of guarantee fee of 2.5% of the credit facility sanctioned payable by the institution. The borrower has to pay an annual service fee of 0.75% of the credit facility.

The technology up gradation scheme covers the specified products/sub sectors but the scope of the scheme may be extended on the basis of representations from the Industry Associations by a simple procedure spelling out machines and equipments presently used, up graded versions proposed to be used, assistance required, approximate cost and benefits of up gradation.

For any other clarification, the members may write to Mr. Sudesh Kumar, Executive Secretary, Confederation of Indian Pharmaceutical Industry (SSI)

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