With an aim to support manufacturers and exporters, the government has modified the Mutual Credit Guarantee Scheme for Micro, Small and Medium Enterprises (MSMEs) (MCGS-MSME), allowing a 5% upfront contribution in tranches after the fourth year. As per the revised scheme, Finance Ministry said the services sector has been included in the scheme, and the cost of equipment/machinery has been reduced up to 60% of the project cost from the earlier 75%. Further, the credit guarantee expiry period has been set at 10 years as compared to the unspecified period in the earlier scheme. The National Credit Guarantee Trustee Company (NCGTC) has operationalised the revised scheme since February 24, 2026. The scheme provides 60% guarantee coverage by NCGTC to Member Lending Institutions (MLIs) for credit facilities up to Rs 100 crore sanctioned to eligible MSMEs under MCGS-MSME for the purchase of equipment/ machinery.

On eligibility criteria, the ministry said that profitable units having exported at least 25% of their sales turnover in each of the previous 3 financial years and satisfying certain export realisation conditions are eligible to avail the scheme. Also, the guaranteed loan amount is pegged at Rs 20 crore, and upfront contribution is 2% of the loan amount, a maximum of Rs 40 lakh, with 1% each refundable in the fourth and fifth year of the guarantee period. Guarantee coverage is 75% of the amount in default, and the guarantee fee would be 'nil' for the first year and thereafter, every year, 0.50% of the loan outstanding.

The MSME sector contributes around 30% to the GDP and over 45% to the exports of India, and provides employment to more than 35 crore workers. The ministry pointed that achieving the vision of 'Viksit Bharat 2047' requires strong, globally competitive, and sustainable MSMEs. It added that the modifications in the MCGS-MSME scheme are expected to facilitate increased availability of credit for the purchase of Plant and Machinery/Equipment by MSMEs, including exporter MSMEs, and give a major boost to the manufacturing and export sector in India.