Cabinet Approves ₹20,000 Cr Credit Guarantee Scheme for Exporters to Boost MSME Liquidity

Ziraat Times News Desk

New CGSE to provide 100% collateral-free credit via NCGTC; aims to strengthen MSMEs, diversify export markets, and enhance India’s global competitiveness

New Delhi, November 12: In a major move to boost India’s export competitiveness and ease access to credit for exporters, the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved the Credit Guarantee Scheme for Exporters (CGSE), envisaging up to ₹20,000 crore in collateral-free credit support through the National Credit Guarantee Trustee Company Limited (NCGTC).

The scheme will provide 100% credit guarantee coverage to Member Lending Institutions (MLIs) for extending additional credit facilities to eligible exporters — both MSME and non-MSME units. The initiative is expected to play a pivotal role in strengthening liquidity, facilitating market diversification, supporting employment, and improving global competitiveness of Indian exporters.

The Department of Financial Services (DFS) under the Ministry of Finance will implement the scheme through the NCGTC, which will act as the guarantee agency.
A Management Committee, chaired by the Secretary, DFS, will monitor implementation, assess progress, and ensure timely delivery of benefits to exporters.

The scheme is designed to supplement existing trade credit lines and offer exporters — particularly MSMEs — the flexibility to expand into new geographies, manage working capital, and cushion against global market volatility.

According to the government, the CGSE will strengthen India’s journey toward becoming a $1 trillion export economy, by addressing one of the biggest hurdles faced by exporters — limited access to affordable, collateral-free financing.

By unlocking additional liquidity, the initiative is expected to sustain export growth, promote diversification into emerging markets, and enhance resilience of export-oriented industries amid changing global trade dynamics.

Officials said the scheme aligns with the government’s vision of Aatmanirbhar Bharat, ensuring that exporters have the financial support to seize new opportunities in international markets.

Exports account for nearly 21% of India’s GDP (FY 2024–25) and are a key pillar of macroeconomic stability, contributing significantly to foreign exchange reserves. Export-oriented industries employ over 45 million people, with MSMEs alone contributing around 45% of total exports.

By providing collateral-free access to ₹20,000 crore in credit, the scheme is expected to:

• Ease working capital pressures for exporters amid global uncertainties.

• Encourage MSMEs to take on new export contracts without fear of loan security constraints.

• Enable exporters to enter new and high-potential international markets.

• Enhance employment generation in export-linked manufacturing and logistics sectors.

• Support India’s macroeconomic stability by sustaining export momentum.

Trade analysts and export bodies have welcomed the move, calling it a timely policy support at a period when Indian exporters are navigating slower global demand and tighter credit conditions.

“This will be a game-changer for smaller exporters who often face difficulty in securing bank loans without collateral,” said a Mumbai-based export finance expert. “It could also help stabilize export performance in key sectors like engineering, textiles, and marine products.”

With the Credit Guarantee Scheme for Exporters (CGSE) complementing the newly announced Export Promotion Mission (EPM), the government appears to be building a comprehensive policy framework that addresses both financial and structural bottlenecks in India’s export ecosystem.

Officials emphasized that the CGSE represents a proactive step in strengthening India’s trade finance infrastructure, ensuring exporters — especially those in emerging sectors — have the resources to scale operations, withstand global challenges, and expand market presence.