Government modifies Mutual Credit Guarantee Scheme to support MSME manufacturers, exporters

The Finance Ministry on Saturday said the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) has been modified to support manufacturers and exporters, allowing a 5% upfront contribution in tranches after the fourth year.

As per the revised scheme, the services sector has been included in the scheme, and the cost of equipment/machinery has been reduced up to 60% of the project cost from the earlier 75%, the Finance Ministry said in a statement.

The National Credit Guarantee Trustee Company Ltd. (NCGTC) has operationalised the revised scheme since February 24, 2026.

According to the modified scheme, the credit guarantee would expire after 10 years, as compared to the unspecified period in the earlier scheme.

Elaborating on eligibility, it said, profitable units having exported at least 25% of their sales turnover in each of the previous 3 financial years and satisfying certain export realisation conditions are eligible to avail the scheme.

Guaranteed loan amount is pegged at ₹20 crore, and upfront contribution is 2% of the loan amount, a maximum of ₹40 lakh, with 1% each refundable in the 4th and 5th year of the guarantee period.

Guarantee coverage is 75% of the amount in default, and the guaranteed fee would be ‘nil’ for the first year and thereafter, every year, 0.50% of the loan outstanding.

MSMEs contribute around 30% to the GDP and over 45% to the exports of India and give employment to more than 35 crore workers.

Achieving the vision of ‘Viksit Bharat 2047’ requires strong, globally competitive, and sustainable MSMEs.

The modifications in the MCGS-MSME scheme are expected to facilitate increased availability of credit for the purchase of Plant and Machinery/Equipment by MSMEs, including exporter MSMEs, and give a major boost to the manufacturing and export sector in India, it said.

The scheme, launched in January 2025, provides 60% guarantee coverage by NCGTC to Member Lending Institutions (MLIs) for credit facilities up to ₹100 crore sanctioned to eligible Micro, Small and Medium Enterprises (MSMEs) under MCGS-MSME for the purchase of equipment/ machinery.