Credit Guarantee Scheme (CGS) for MSME & non-MSME Exporters

The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the Credit Guarantee Scheme for Exporters (CGSE) — a landmark initiative designed to provide 100% credit guarantee coverage to banks and financial institutions for extending additional credit up to ₹20,000 crore to eligible Indian exporters, including Micro, Small, and Medium Enterprises (MSMEs).

This scheme marks another important step in strengthening India’s export ecosystem and supporting the government’s vision of achieving a $1 trillion export target under the Aatmanirbhar Bharat (self-reliant India) mission.

What is the Credit Guarantee Scheme for Exporters (CGSE)

The CGSE is a new initiative launched to ensure that exporters get easier access to credit without needing to pledge heavy collateral.
Under this scheme:

• The National Credit Guarantee Trustee Company Limited (NCGTC) will provide 100% credit guarantee coverage to Member Lending Institutions (MLIs) — which include scheduled commercial banks and financial institutions.
  
• These MLIs can extend additional credit facilities up to ₹20,000 crore to exporters.
  
• The goal is to enhance liquidity, promote business continuity, and increase global competitiveness for exporters.
  

Implementation Strategy

The scheme will be implemented by the Department of Financial Services (DFS) through NCGTC.
To ensure smooth execution, a Management Committee headed by the Secretary of the DFS will monitor and oversee the progress of the scheme.

This committee will be responsible for:

• Setting operational guidelines,
• Ensuring efficient coordination between NCGTC and lending institutions,
• Tracking the scheme’s impact on export growth.

Who Will Benefit from CGSE?

The primary beneficiaries of this scheme are:

• Export-oriented companies,
• MSMEs engaged in manufacturing or trading for export,
• Service exporters seeking credit support for international expansion.
  

By offering collateral-free loans, the government aims to make financing more accessible to exporters who often face difficulties in securing loans due to limited assets or lengthy approval processes.

Major Impact of the Scheme

The CGSE is expected to have wide-ranging positive effects on India’s export landscape:

Boost to Global Competitiveness: Exporters will gain better financial flexibility to explore new and emerging global markets. This will help diversify India’s export destinations beyond traditional ones.

Improved Liquidity: Collateral-free credit will enhance the liquidity of export businesses, ensuring smoother operations and timely order execution.

Support for MSMEs: MSMEs contribute nearly 45% of India’s total exports and employ millions of people. With easier credit access, they can scale operations, upgrade technology, and compete globally.

Contribution to Aatmanirbhar Bharat: The scheme aligns with India’s self-reliance mission by encouraging local businesses to expand globally and reduce dependence on imported goods.

Progress Toward the $1 Trillion Export Target: By addressing financial barriers, the CGSE will accelerate India’s journey toward achieving its ambitious $1 trillion export target.

Background: Why This Scheme Matters

Exports are one of the strongest pillars of the Indian economy, accounting for around 21% of India’s GDP in FY 2024-25. Export-oriented industries also play a major role in job creation — employing over 45 million people across sectors like textiles, pharmaceuticals, engineering goods, IT services, and more.

However, many exporters — especially small and medium enterprises — struggle to access credit for business expansion, new product development, and international trade operations.

By offering 100% government-backed guarantees, the CGSE reduces lending risk for banks, encouraging them to provide more loans to exporters. This ensures steady business growth, financial stability, and export diversification.

What Exporters Should Do Now

Exporters and MSMEs should:

• Stay updated on the official guidelines and eligibility criteria for the scheme once published by the Department of Financial Services.
• Approach their Member Lending Institutions (MLIs) such as public or private sector banks to learn about loan availability under CGSE.
• Prepare business and export documents such as registration certificates, financial records, and export orders to apply for additional credit.

Conclusion

The Credit Guarantee Scheme for Exporters (CGSE) is a timely and strategic move by the Indian government to boost the export sector. By offering collateral-free loans with 100% credit guarantee coverage, it not only enhances liquidity for exporters but also reinforces India’s position as a strong global trade player.

This initiative will empower MSMEs, strengthen foreign exchange reserves, and move India closer to its long-term vision of a self-reliant and globally competitive economy.