On Wednesday, the Indian government approved the launch of the Mutual Credit Guarantee Scheme (MCGS), designed to improve access to credit for micro, small, and medium enterprises (MSMEs) in the manufacturing sector.
This initiative aligns with the Union Budget 2024-25’s focus on supporting the MSME sector and enhancing the “Make in India” campaign.
The MCGS will provide 60% guarantee coverage for loans up to Rs 100 crore through the National Credit Guarantee Trustee Company Limited (NCGTC).
This support will enable MSMEs to secure financing for the purchase of machinery, equipment, and plants, helping to fuel growth and strengthen the manufacturing industry.
The Mutual Credit Guarantee Scheme offers a range of features aimed at ensuring easy access to credit for eligible MSMEs:
The scheme is a significant step toward strengthening India’s manufacturing sector, which currently contributes 17% to the country’s GDP and employs over 27.3 million workers.
As part of Prime Minister Modi’s vision of “Make in India, Make for the World,” the government aims to increase the manufacturing sector’s contribution to 25% of GDP shortly.
The MCGS-MSME will collaborate with a variety of Member Lending Institutions (MLIs), including Scheduled Commercial Banks (SCBs), Non-Banking Financial Companies (NBFCs), and All India Financial Institutions (AIFIs) registered with NCGTC.
These institutions will play a vital role in disbursing loans to eligible MSMEs under the scheme, further strengthening the sector’s access to financial support.
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