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Financial Services Secretary M Nagaraju has said that the government would soon launch a new credit guarantee scheme for the Micro, Small and Medium Enterprise (MSME) sector covering loans up to Rs 100 crore. He said the scheme is expected to be placed before the Union Cabinet soon for its approval. MSME sector employs 50 million people.

He stated that MSMEs exports have witnessed a remarkable rise, increasing from Rs 3.95 lakh crore in 2020-21 to Rs 12.39 lakh crore in 2024-25, underscoring their critical role in boosting India's economy and strengthening global trade. The MSME sector in India has consistently demonstrated remarkable resilience and adaptability, significantly contributing to the nation's GDP over the years. The Gross Value Added (GVA) by MSMEs in India's GDP was 29.7 per cent in 2017-18, rising to 30.1 per cent in 2022-23. To promote entrepreneurship in rural India, he said the government is very keen to lend more to rural areas through its various schemes. As the country surges ahead, he said there is need to focus on four things, quality, linkages for exports, capacity building, and support to achieve the vision of Vikshit Bharat.

In Budget 2024-25, the Finance Minister Nirmala Sitharaman had announced that for facilitating term loans to MSMEs for purchase of machinery and equipment without collateral or third-party guarantee, a credit guarantee scheme will be introduced. The scheme will operate on pooling of credit risks of such MSMEs. A separately constituted self-financing guarantee fund will provide, to each applicant, guarantee cover up to Rs 100 crore, while the loan amount may be larger. She had said the borrower will have to provide an upfront guarantee fee and an annual guarantee fee on the reducing loan balance.