January 9, 2025
The scheme, announced in Budget 2024-25, aims to provide term loans without collateral for the purchase of machinery and equipment
A self-financing guarantee fund will pool credit risks and offer guarantee cover up to INR 100 crore for eligible MSMEs
MSME exports have surged from INR 3.95 lakh crore in 2020-21 to INR 12.39 lakh crore in 2024-25, reflecting their growing economic impact
The MSME sector contributed 30.1% to India’s GDP in 2022-23, showcasing its critical role in national growth
The government is set to introduce a new credit guarantee scheme for Micro, Small and Medium Enterprises (MSMEs), facilitating loans up to INR 100 crore without collateral. Financial Services Secretary M Nagaraju stated that the scheme, proposed in the 2024-25 Budget, is awaiting Union Cabinet approval.
The initiative aims to provide term loans for MSMEs to purchase machinery and equipment without requiring collateral or third-party guarantees. A self-financing guarantee fund will pool credit risks and offer guarantee coverage of up to INR 100 crore per applicant, although the loan amount could exceed this limit. Borrowers must pay upfront and annual guarantee fees based on the reduced loan balance.
Nagaraju highlighted the MSME sector’s resilience, noting its vital role in boosting the economy. MSME exports have increased threefold, from INR 3.95 lakh crore in 2020-21 to INR 12.39 lakh crore in 2024-25. Additionally, the sector’s contribution to India’s GDP grew from 29.7% in 2017-18 to 30.1% in 2022-23.
The scheme aligns with the government’s vision to enhance rural entrepreneurship. Nagaraju emphasised the importance of focusing on quality, export linkages, capacity building, and comprehensive support to achieve the Vikshit Bharat vision.
The announcement underscores the government’s commitment to empowering MSMEs, employing over 50 million people, and fostering sustainable economic growth. With a focus on innovation and expansion, the sector is poised to strengthen India’s position in global trade while driving domestic prosperity.
Source: New Indian Express