Though the government has relaxed the norms for availing the assistance under the Credit Linked Capital Subsidy Scheme (CLCSS), it may not turn out to be an instant hit among the small scale pharma industry which still prefers the Pharmaceutical Technology Upgradation Fund (PTUF) scheme better.

Though the pharmaceutical department expects that around 3000 SSI pharma units can take gains out of it and avail upto Rs 400 crore, the target may become a distant dream, given the various ground factors and the past records. Even the very department itself has assessed that the industry would take a 'wait and watch' policy and there are other bottlenecks too on the way. Besides, the statistics about the performance of the scheme in the past also do not augur well.

"Although CLCSS affords a relief in the form of capital subsidy at the rate of 15 per cent as per the relevant provisions, the point remains that SSI has to repay 85 per cent of the loan in due course. There will be corresponding unwillingness of beneficiaries to incur extra expenditure and perception of poor returns for the investments made/loan taken and time spent. SSI units may therefore have their own inertia to wait and watch,'' according to the note of assessment prepared by the department.

Besides, it is also viewed that existence of multiple stakeholders such as certification agencies, commitment of financial institutions like SIDBI, organizational capacity of the department of pharma also would hamper the progress of the scheme.

In the last nine years, only 126 pharma units had taken loans under the CLCSS scheme since its inception, according to the data available. A meagre total of Rs 5.54 crore has been disbursed to the pharma units under the scheme, which is available for 48 various sub-sectors including pharma for technology upgradation.

Figures showed that the total amount of loans disbursed under CLCSS for all the sectors was just Rs 5 crore in 2000-2001. It remained almost the same for five years, before picking up to Rs 25 crore in 2005-06. It further went up to Rs 73.63 crore in 2006-07 and to Rs 76.4 crore during 2007-08. The total amount given during 2008-09 was Rs 108.88 crore, whereas the pharma department expectation now is Rs 400 crore for the pharma sector alone in the next couple of years, and which is impossible.

"The changed guidelines, which came after the Planning Commission rejected the PTUF and asked the department to revise the norms of CLCSS, will definitely attract more units to avail the loans. But there will not be a major rush as the authorities expect. The PTUF scheme is better as it is going to be under the pharma department alone and with enough budgetary support. Rs 560 crore was the planned allocation for PTUF and the norms planned were easier too,'' an industry leader explained.