The government has modified the Mutual Credit Guarantee Scheme (MCGS) to support Micro, Small, and Medium Enterprises (MSMEs), Manufacturers, and Exporters, in line with the 2025-26 budget.
The scheme provides a 60% guarantee coverage by the National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions for credit facilities up to 100 crore rupees sanctioned to eligible MSMEs under the MCGS-MSME scheme for the purchase of equipment and machinery.
In a statement, the Ministry of Finance said that the modifications expand coverage, reduce compliance burdens, and provide targeted incentives for exporter MSMEs. Under the revised norms, the initial 5% contribution has been made refundable, with 1% returned each year from the fourth year onwards, subject to satisfactory loan performance.
The eligibility criteria have also been expanded to include service sector MSMEs, while the minimum project cost requirement towards machinery and equipment has been reduced to 60% from the earlier 75%.
According to the Ministry, the modifications in the MCGS-MSME scheme are expected to facilitate increased availability of credit for the purchase of Plant and Machinery and Equipment by MSMEs, including exporter MSMEs, and provide a major boost to the manufacturing and export sector in India.
