SchemesMonday, 23 March 2026·The Hindu
MCGS-MSME modified to expand service-sector eligibility and 10-year guarantee tenure
The government modified the Mutual Credit Guarantee Scheme for MSMEs to widen eligibility and support manufacturing and exports.
Key highlights
Direct fact
Following Budget 2025-26, the Government of India modified the Mutual Credit Guarantee Scheme for Micro, Small and Medium Enterprises (MCGS-MSME), originally launched in January 2025, to improve credit access for plant and machinery purchases.
Key specifics
- The upfront contribution of 5% is now refundable at 1% annually from the 4th year onwards.
- Service Sector MSMEs have been added to the scheme’s eligibility list.
- The minimum project cost share for machinery or equipment has been reduced to 60% from 75%.
- NCGTC continues to provide 60% guarantee coverage for facilities up to ₹100 crore.
- For exporter MSMEs, the guaranteed loan amount is capped at ₹20 crore with 75% coverage in default.
Exam lens
MSME scheme question, January 2025 launch, Budget 2025-26 modification, 10-year tenure, ₹100 crore, ₹20 crore exporter cap; TNPSC may ask the changed eligibility and guarantee percentages.