The Government has modified the Mutual Credit Guarantee Scheme (MCGS) to support Micro, Small and Medium Enterprises (MSME) Manufacturers and Exporters in line with Budget 2025-26. The scheme provides 60 per cent guarantee coverage by National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions for credit facilities up to 100 crore rupees sanctioned to eligible MSMEs under MCGS-MSME for purchase of equipment and machinery. In a statement, the Ministry of Finance said that modifications expand coverage, reduce compliance burden, and provide targeted incentives for exporter MSMEs.
Under the revised norms, the five per cent upfront contribution has been made refundable, with one per cent 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 per cent from the earlier 75 per cent.
As per the Ministry, the modifications in MCGS-MSME scheme are expected to facilitate increased availability of credit for purchase of Plant and Machinery and Equipment by MSMEs, including exporter MSMEs, and give a major boost to the manufacturing and export sector in India.
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