Government Expands Credit Guarantee Scheme to Empower Startups

Current Affairs National

Posted by newadmin on 2025-05-12 08:50:54 |

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The Government of India has significantly expanded the Credit Guarantee Scheme for Startups (CGSS), aiming to boost early-stage businesses by improving access to debt funding. Announced by the Department for Promotion of Industry and Internal Trade (DPIIT), the expansion seeks to reduce financial barriers and strengthen innovation across priority sectors.

Key enhancements include a doubling of the guarantee ceiling from ₹10 crore to ₹20 crore per borrower. For loans up to ₹10 crore, the guarantee coverage now stands at 85%, while loans exceeding ₹10 crore enjoy a 75% coverage. These measures are expected to lower lending risks, encouraging more financial institutions to support startups.

To further incentivize borrowing, the Annual Guarantee Fee (AGF) for startups in 27 Champion Sectors has been slashed from 2% to 1%. These sectors—spanning aerospace, defence, IT, biotechnology, tourism, and medical value travel—represent critical areas under the Make in India initiative, aimed at positioning India as a global innovation hub.

Originally launched in October 2022 under the Startup India umbrella, CGSS promotes collateral-free financing for startups. The expanded scheme also integrates feedback-driven operational reforms, ensuring it meets the evolving needs of both lenders and entrepreneurs.

This move aligns with Prime Minister Narendra Modi’s vision of a “Viksit Bharat” (Developed India), fostering a self-reliant, innovation-led economy powered by a vibrant startup ecosystem.

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