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India’s technology upgradation scheme to boost MSMEs

The Cabinet Committee on Economic Affairs (CCEA) has approved the Credit Linked Capital Subsidy and Technology Upgradation Scheme (CLCS-TUS), with a total outlay of about US $407.4 million.

A press release said that the project aims to boost the “competitiveness” of micro, small, and medium enterprises (MSMEs) by

Integrating ongoing technology upgradation efforts with Credit Linked Capital Subsidy (CLCS)

The CLCS facilitates technology upgradation by providing 15 percent upfront capital subsidy (up to a maximum cap of US $21,048) to MSMEs to upgrade existing technology to a substantially higher tech level, one involving improved productivity.

The technology upgrades will help increase the quality of products and environmental conditions (work environment). The scheme also includes the installation of improved packaging technique, anti-pollution measures, energy conservation machinery, in-house testing, and online quality control.

Handholding “zero defect” and “zero effect” manufacturing

Zero defect and zero effect or ZED is India’s business model for MSMEs. It addresses the quality and ecological needs of domestic and overseas customers, society, employees, partners, regulators, and investors.

The zero-defect component focuses on the customer and involves zero non-conformance or non-compliance and promotes zero waste.

The other element, that is zero-effect is society-focused and works toward achieving zero air pollution, liquid discharge (ZLD), and solid waste and zero wastage of natural resources.

Increasing productivity through waste reduction

India’s new lean manufacturing initiative is aimed at eliminating waste in every area of production including customer relations, product design, supplier networks, and factory management. It intends to improve quality, eliminate waste, reduce time, and reduce total cost.

Design intervention

In 2016, the government launched the Design Clinic Scheme for MSMEs under the National Manufacturing Competitiveness Programme (NMCP). It aimed to provide design initiative for improvements in products, processes, communication, ergonomics, packaging, and several other system level activities through design support and interventions.

Cloud computing (digital MSMEs)

In 2017, the Government proposed a subsidy up to about US $1,500 (IN 1 lakh) for MSMEs to encourage them to use cloud computing for ICT applications. The enterprises will use the Internet to access either common or tailor-made IT infrastructure, including software to managing business.

The proposals were a part of the amended guidelines of the Promotion of Information and Communication Technology in MSME Sector scheme. The objective of which was to increase the quality of production and export potential of Indian MSMEs, by adopting ICT applications.

Activities under the scheme included identifying target cluster for ICT intervention, establishing e-readiness infrastructure, developing web portals for clusters, and ICT skill development.

Also, it included the preparation of local software, construction of e-catalogue, and networking MSME cluster portals on to a national-level portal to outreach MSMEs to global markets.

According to the Development Commissioner for MSMEs, at present, there are six MSME-Technology Development Centres in the country.


Through the project, the government has made special provisions to promote entrepreneurship for scheduled castes and scheduled tribes (SC/STs), which are groups of historically disadvantaged people in the country.

Also, it will provide for women in the north-eastern region (NER), hill states (Jammu and Kashmir, Himachal Pradesh and Uttarakhand), island territories (Andaman and Nicobar and Lakshadweep), and Left-Wing Extremism (LWE) districts.

For the above, subsidies are also admissible for investments in acquisitions, replacements of plant and machinery, and equipment and technology upgradation of any kind.

The project is demand-driven but its coverage has been made more inclusive, the release said.

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