The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the Credit Guarantee Scheme for Exporters (CGSE), offering 100 per cent credit guarantee coverage on up to Rs 20,000 crore in additional loans to eligible exporters, including micro, small and medium enterprises (MSMEs), the government announced.
The scheme, to be administered by the Department of Financial Services (DFS) through the National Credit Guarantee Trustee Company Limited (NCGTC), will provide collateral-free credit support via Member Lending Institutions (MLIs) to help exporters expand into new markets and improve liquidity.
The move aims to strengthen India’s push towards a $1 trillion export target and reinforce the Aatmanirbhar Bharat vision by enhancing global competitiveness, particularly for MSMEs which account for nearly 45 per cent of total exports. A Management Committee chaired by the DFS Secretary will monitor implementation and progress.
“The scheme will enable exporters to access timely, collateral-free credit, ensuring smooth operations and market diversification into high-growth and emerging regions,” the government said in a statement.
Exports currently contribute nearly 21 per cent to India’s GDP in FY 2024-25 and play a pivotal role in bolstering foreign exchange reserves. The export-oriented sector directly and indirectly employs over 45 million people, with sustained growth helping maintain current account stability and macroeconomic resilience.
Despite global headwinds, India has recorded consistent export expansion, but exporters, especially MSMEs, face liquidity constraints and limited access to working capital for market exploration. By removing collateral barriers, the CGSE is expected to unlock working capital, reduce financial stress, and accelerate market penetration in sectors such as textiles, engineering goods, pharmaceuticals, and electronics.
“This proactive intervention will not only support business continuity but also drive strategic diversification, reducing over-dependence on traditional markets,” an official from the Ministry of Commerce and Industry said.
Officials said the NCGTC will provide 100 per cent guarantee coverage on fresh or enhanced credit facilities. The scheme caps aggregate exposure at up to Rs 20,000 crore. All eligible exporters will benefit, with a special focus on MSMEs.
Credit will be delivered through scheduled commercial banks, regional rural banks and other MLIs. A DFS-led Management Committee will ensure transparency and efficacy in oversight.
The scheme builds on existing credit guarantee frameworks but introduces full risk coverage, a significant departure from partial guarantees, making lenders more willing to extend credit without collateral demands, the offcials said.
The CGSE aligns with India’s broader trade policy reforms, including Production Linked Incentive (PLI) schemes, free trade agreements (FTAs), and infrastructure upgrades at ports and logistics hubs.
With global supply chains shifting and new opportunities emerging in Africa, Latin America, and ASEAN, the Indian government sees enhanced financial access as critical to capturing higher value-added exports.
“MSMEs are the backbone of India’s export ecosystem. This guarantee will empower them to compete globally without being constrained by balance sheet limitations,” said a senior DFS official.
The NCGTC is expected to issue operational guidelines within weeks, with MLIs onboarding eligible exporters shortly thereafter.
A digital portal for applications is also under development to ensure seamless processing.
Commerce Secretary Sunil Barthwal hailed the decision, stating: “This is a transformative step towards making Indian exports more resilient, diversified, and future-ready.”
As India targets $1 trillion in merchandise and services exports in the coming years, the CGSE marks a decisive fiscal intervention to turn ambition into actionable growth.
