Mutual Credit Guarantee Scheme for MSMEs modified: service sector added, special terms for exporters
On 21 March 2026 the Government modified the Mutual Credit Guarantee Scheme for MSMEs, adding service-sector MSMEs, making the 5% upfront contribution refundable and creating special provisions for exporters with 75% guarantee coverage.
Summary
The Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), launched in January 2025, gives 60% guarantee coverage through NCGTC for loans of up to ₹100 crore to MSMEs for buying equipment or machinery. The modifications make the 5% upfront contribution refundable (1% a year from the 4th year, subject to performance), include service-sector MSMEs, lower the minimum share of equipment/machinery to 60% of project cost from 75%, and set the guarantee to expire after 10 years. For exporters that are profitable and exported at least 25% of turnover in each of the previous three years, loans of ₹20 crore get 75% coverage, a 2% upfront contribution (maximum ₹40 lakh) and no guarantee fee in the first year, then 0.50% a year.
Key facts
- Scheme
- MCGS-MSME, launched January 2025
- Base cover
- 60% by NCGTC on loans up to ₹100 crore for equipment/machinery
- Changes
- Service-sector MSMEs included; 5% upfront contribution refundable; equipment share 60% (was 75%); 10-year guarantee
- Exporters
- ≥25% exports in each of last 3 years; ₹20 crore loan; 75% coverage
- Exporter fee
- Nil in year 1, then 0.50% a year
Practice MCQs 2 questions
Under the modified MCGS-MSME of March 2026, what guarantee coverage is offered to eligible exporters?
Show answer
Correct answer: C — 75% of the amount in default
Exporters get 75% coverage on a ₹20 crore guaranteed loan, compared with the base 60% cover of the scheme.
Consider the following about the modifications to MCGS-MSME in March 2026: 1. Service-sector MSMEs have been included in the scheme. 2. The minimum share of equipment/machinery in project cost has been raised from 60% to 75%. Which of the above is/are correct?
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Correct answer: A — 1 only
Service-sector MSMEs were added; the minimum equipment/machinery share was reduced to 60% from 75%, not raised, so statement 2 is wrong.