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By EquityPandit

ECONOMY

Govt Launches Rs 100 Cr Credit Guarantee Scheme for MSME Manufacturing Boost

The MCGS-MSME aims to boost India's manufacturing sector.

The government launched the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) to provide 60% guarantee coverage for loans up to Rs 100 crore, aimed at helping MSMEs purchase equipment and machinery.

Eligible MSMEs must have valid Udyam Registration, with the loan amount not exceeding Rs 100 crore and at least 75% of the project cost allocated for equipment or machinery.

The guarantee fee is nil during the sanction year, 1.5% per year for the next three years, and 1% per year thereafter, based on the loan outstanding as of 31st March of the previous year.

The scheme will be available for four years or until a cumulative guarantee of Rs 7 lakh crore is issued, whichever comes first.

The MCGS-MSME aims to boost India’s manufacturing sector, which contributes 17% to GDP, by facilitating credit for plant and machinery purchases, enabling faster growth and expansion.

India is increasingly seen as an alternative supply source due to its raw materials, low labour costs, and growing manufacturing expertise.

This scheme addresses long-standing demands from industry associations, particularly for medium-sized enterprises, by offering collateral-free loans to aid their expansion.

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