New Delhi: In a transformative push for India’s startup ecosystem, the Department for Promotion of Industry and Internal Trade, under the Ministry of Commerce and Industry, today notified an expansion of the Credit Guarantee Scheme for Startups, doubling the guarantee cover ceiling per borrower from ₹10 crore to ₹20 crore.
This step, aimed at fueling innovation and self-reliance, increases the guarantee cover to 85% of the default amount for loans up to ₹10 crore and 75% for loans exceeding ₹10 crore, while slashing the Annual Guarantee Fee for startups in 27 Champion Sectors from 2% to 1% per annum. The move promises to unlock greater credit flow, empowering entrepreneurs to drive cutting-edge research and development and propel India towards a vibrant, innovation-driven economy, the Ministry stated.
The expanded scheme aligns with the government’s vision of transforming India into a self-reliant, innovation-led nation, as articulated in the Startup India initiative launched on January 16, 2016. By enhancing credit support, the Credit Guarantee Scheme for Startups seeks to address the financing challenges faced by startups, encouraging more financial institutions to lend without the burden of perceived risks. The 27 Champion Sectors, identified under the Make in India campaign to boost manufacturing and service capabilities, stand to benefit significantly, with the reduced Annual Guarantee Fee making funding more attractive and fostering domestic innovation. This strategic enhancement, proposed in the Union Budget 2025-26, is set to catalyse entrepreneurship and expand the runway for startups to experiment and develop pioneering technologies.
Building on this vision, the Credit Guarantee Scheme for Startups, first approved on October 6, 2022, facilitates collateral-free debt funding through working capital, term loans, and venture debt. Eligible lenders, including Scheduled Commercial Banks, All India Financial Institutions, Non-Banking Financial Companies, and Alternative Investment Funds registered with the Securities and Exchange Board of India, can now extend credit with greater confidence, supported by the scheme’s increased guarantee limits. The expansion is expected to draw more financial institutions into the startup ecosystem, amplifying fund availability and enabling innovators to pursue ambitious research and development projects.
To further support startups, the Department for Promotion of Industry and Internal Trade incorporated operational reforms and enabling measures, shaped through consultations with the startup ecosystem. These changes make the scheme more appealing to both lenders and startups seeking funding, reducing barriers and enhancing accessibility. The bolstered Credit Guarantee Scheme for Startups is poised to empower a wider range of innovators, driving India closer to its goal of becoming a Viksit Bharat—a developed, self-reliant nation powered by entrepreneurial zeal.
The Startup India Action Plan, unveiled alongside the initiative’s launch in 2016, laid the foundation for a thriving startup ecosystem. The Credit Guarantee Scheme for Startups, a cornerstone of this plan, continues to evolve, with its latest enhancements reflecting the government’s commitment to nurturing entrepreneurship. Entrepreneurs and stakeholders can access the scheme’s notification and details at: https://www.ncgtc.in/en/product-details/CGSS/Credit-Guarantee-Scheme-for-Start-ups-(CGSS).
– global bihari bureau
