MSMEs Get Major Boost with Rs 100 Crore Credit Guarantee Scheme, Aimed at Promoting Investment and Global Competitiveness
NEW DELHI, Jan 30: The introduction of a new credit guarantee scheme for the MSME sector, offering loans up to Rs 100 crore, is expected to significantly boost investment, manufacturing, and exports, according to exporters. They have long faced challenges in securing adequate financing for capital investments, which has hindered their ability to scale operations and compete in international markets.
On January 29, the government unveiled the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), aiming to provide 60% guarantee coverage from the National Credit Guarantee Trustee Company Ltd (NCGTC) to Member Lending Institutions (MLIs) for credit facilities of up to Rs 100 crore. This scheme is designed to support MSMEs in acquiring equipment and machinery, thereby enhancing their operational capacities.
To be eligible for the scheme, MSMEs must meet specific conditions, including having a valid Udyam Registration Number. The loan guarantee amount cannot exceed Rs 100 crore, and the cost of equipment or machinery must make up at least 75% of the total project cost, which could exceed Rs 100 crore.
Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), emphasized that the new scheme would significantly improve the financial accessibility of MSMEs, especially those in manufacturing and export sectors. With the 60% guarantee coverage, MSMEs will gain much-needed financial support to invest in modern machinery and equipment, which will directly contribute to improved production, quality, and global competitiveness.
“This scheme aligns with the vision of ‘Make in India, Make for the World’,” Sahai added, noting that the MSME export credit rate ranges between 10% and 11.5%, while the term loan rate is between 11% and 13.5%.
The scheme will be applicable to loans sanctioned under MCGS-MSME for four years from the date of the operational guidelines or until the cumulative guarantee reaches Rs 7 lakh crore, whichever comes first.
Manufacturing currently accounts for 17% of India’s GDP and provides employment to over 27.3 million people. International trade expert and Chairman of Hi-Tech Gears, Deep Kapuria, called the scheme a timely policy decision, especially as India looks to bolster its manufacturing sector amid global supply chain realignments. “Providing credit to MSMEs is a crucial step in integrating them into global value chains,” Kapuria said, noting its particular importance for India’s electronics sector, where the country is seeking to build a domestic component manufacturing ecosystem.
SK Saraf, Founder Chairman of Technocraft Industries, also praised the scheme, saying it would contribute to enhancing India’s domestic manufacturing capabilities and increase the sector’s contribution to the national GDP.
Mithileshwar Thakur, Secretary General of the Apparel Export Promotion Council (AEPC), noted that the apparel industry, which is largely driven by MSMEs, would greatly benefit from the scheme, leading to increased employment opportunities and strengthening India’s manufacturing potential.
The scheme marks a key step towards empowering MSMEs, fostering economic growth, and positioning India as a stronger player in the global market.
