Mutual Credit Guarantee Scheme Approved to Boost MSME Manufacturing.

The Government of India has approved the Mutual Credit Guarantee Scheme (MCGS-MSME) which was announced in the Budget 2024-25 to enhance credit access for Micro, Small, and Medium Enterprises (MSMEs) in the manufacturing sector.

Key Features of the Scheme:

✅ Loan Coverage: Loans of up to ₹100 crore for plant and machinery purchases will be eligible for 60% guarantee coverage reducing risk for banks and financial institutions.
✅ Repayment Period: Loans of up to ₹50 crore will have a repayment period of up to 8 years, with a two-year moratorium on principal repayments. For loans exceeding ₹50 crore, extended repayment and moratorium periods may be considered.
✅ Upfront Contribution: Borrowers must deposit 5% of the loan amount at the time of applying for guarantee cover.
✅ Funding Target: The government aims to facilitate ₹7 lakh crore in cumulative guarantees over the next four years to boost MSME credit access.

Impact on Indian Manufacturing & Economy.

🔹 The manufacturing sector contributes 17% to India’s GDP and provides employment to over 2.73 crore workers.
🔹 The government aims to increase the manufacturing sector’s share to 25% of GDP, aligning with the Make in India mission.
🔹 This scheme will enhance MSME growth, improve credit flow, and strengthen India’s industrial competitiveness.

The Mutual Credit Guarantee Scheme is a strategic initiative to boost MSME manufacturing encourage industrial expansion, and support economic growth in India.

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