New Delhi: To simplify credit access for startups and fuel innovations in priority sectors, the government doubled its guarantee scope under its Credit Guarantee Scheme (CGSS), thus allowing each borrower to limit from ₹100 million ₹200 million.
The move is under tightening funding conditions, and startups demand greater institutional support as private capital flows dry up.
The revised plan was notified by the Ministry of Promotion of Industry and Internal Trade Promotion on Friday, also increased guarantee coverage to 85% loan scope ₹Loans exceeding this threshold are 100 million and 75%. The government positioned the expanded coverage as a way for startups to secure working capital, term loans and risky debt, which is key to maintaining R&D and product development.
“This move will increase entrepreneurship growth with the increase in unsecured credit support and enhanced guaranteed guarantees. In addition, AATMANIRBHARTA, the champion division of 27 title sectors made in India, will benefit from annual guarantee premiums for the year, and Piyush Goyal will benefit from X..
The annual guarantee fee (AGF) of startups in 27 identified championship departments has been cut from 2% to 1% per year. These departments are identified under the “Made in India” program, including advanced manufacturing, electronics, defense, food processing and clean energy.
“Reduced guarantee fees and expanded insurance will make formal credit more accessible and attractive to startups, especially startups that innovate in key areas. This will not only reduce reliance on equity capital, but will also deepen the debt ecosystem,” DPIIT told the joint secretary. Mint.
The CGSS extension follows consultations with startup stakeholders and is part of the joint budget announcement for the fiscal year 26. The government expects that these changes will encourage more banks and financial institutions to lend to early stage businesses, which is often difficult to obtain funding due to their high risk profile.
CGSS was launched in 2022 to address collateral bottlenecks facing startups by providing loans to banks, financial institutions, non-bank financial companies (NBFCS) and alternative investment funds registered with the Securities and Exchange Commission of India (SEBI).
The latest revisions align with a broader policy shift to strengthen emerging industries as global macroeconomic uncertainty strengthens private capital flows.
For many young companies with deep technology, hardware and industrial innovation, timely access to credit remains a challenge despite promising business models. DPIIT said the plan has been adjusted to address operational bottlenecks and make it easier for borrowers and lenders to access.
Industry experts believe that the expanded coverage is a timely intervention in India’s MSME sector.
“The revision of CGSS will help stimulate further lending in sectors that are critical to India, especially in manufacturing. Crucially, it will raise MSME loans as credit demand… is expected to rise global tariff uncertainty,” said Bexley Advisors, Bexley Advisors, Bexley Advisors, utkarsh Sinha, an investment bank-savvy savvy.
Amit Sachdev, co-founder and COO of M1xchange, an approved TREDS platform approved by India, said the plan will strengthen lender confidence and encourage financial institutions to support MSMES through supply chain financing, working capital loans and bill discounts.
“These measures will not only enhance the competitiveness of MSME, but will also promote the “Made in India” program, positioning India as a strong player in the global manufacturing and supply chain environment,” Sachdev said.
“This not only enables governments to make startups more efficient use of resources. This not only enhances their contribution to economic growth and technological advancement, but also lays the foundation for building a resilient and future emerging entrepreneurial ecosystem.”
As of December 2024, DPIIT has considered 157,000 entities as startups. According to a government statement, these startups have generated more than 1.55 million direct jobs since the launch of the Startup India Initiative on January 16, 2016.
