In a landmark decision aimed at strengthening India’s export ecosystem and supporting the country’s journey towards Aatmanirbhar Bharat, the Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the introduction of the Credit Guarantee Scheme for Exporters (CGSE).
The scheme envisions collateral-free credit support of up to ₹20,000 crore to eligible exporters, including both MSME and non-MSME exporters, backed by a 100% credit guarantee provided by the National Credit Guarantee Trustee Company Limited (NCGTC).
Enhancing Liquidity and Supporting Export Growth
The CGSE aims to provide much-needed liquidity support to exporters, helping them expand into new and emerging global markets and strengthen their competitiveness. By reducing credit risk for banks and financial institutions, the scheme encourages Member Lending Institutions (MLIs) to extend additional export credit without the need for collateral.
This initiative is expected to play a pivotal role in ensuring business continuity, promoting market diversification, and sustaining the momentum toward India’s ambitious USD 1 trillion export target.
Implementation Strategy
The Department of Financial Services (DFS), under the Ministry of Finance, will implement the CGSE through the NCGTC. A Management Committee, chaired by the Secretary, DFS, will monitor and oversee the scheme’s progress and ensure efficient execution.
Under this framework, the NCGTC will provide 100% credit guarantee coverage to MLIs for the credit facilities extended to exporters. This will reduce the perceived credit risk associated with export lending, thereby encouraging banks and financial institutions to increase the flow of credit to this vital sector.
Major Impact and Expected Outcomes
The Credit Guarantee Scheme for Exporters is poised to deliver multifaceted benefits to the economy:
- Enhanced Global Competitiveness: By improving exporters’ access to affordable finance, the scheme will enable Indian products and services to compete more effectively in global markets.
- Market Diversification: With better liquidity and credit availability, exporters can explore new and niche markets, reducing dependence on traditional destinations.
- Employment Generation: Export-oriented sectors—particularly MSMEs—are significant job creators. The scheme will support millions of direct and indirect jobs linked to India’s export industries.
- Macroeconomic Stability: Sustained export growth will strengthen foreign exchange reserves, improve the current account balance, and contribute to overall economic resilience.
In essence, CGSE will act as a catalyst for innovation, productivity, and expansion within the export community, further integrating India into global value chains.
Background and Context
Exports are a cornerstone of India’s economic growth, accounting for nearly 21% of GDP in FY 2024–25. Export-oriented industries directly and indirectly employ over 45 million people, while MSMEs contribute nearly 45% of India’s total exports.
Given the volatile global economic environment, ensuring access to timely and collateral-free credit has become essential for maintaining export competitiveness. Through CGSE, the Government provides a robust financial safety net that empowers exporters to pursue new opportunities and adapt to global challenges.
Towards Aatmanirbhar Bharat and Viksit Bharat 2047
The approval of CGSE marks another decisive step in India’s commitment to fostering self-reliance, resilience, and global leadership. By empowering exporters with easier access to finance and risk-free credit, the scheme will bolster India’s position as a reliable global trading partner.
Aligned with the vision of Azadi Ka Amrit Mahotsav and the roadmap to Viksit Bharat 2047, the Credit Guarantee Scheme for Exporters stands as a testament to the Government’s dedication to empowering businesses, creating jobs, and driving sustainable economic growth.