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Dated: 02.12.2025
Credit Guarantee Scheme for Exporters (CGSE): Empowering Indian Exporters to Thrive in Global Markets
The Government of India, through the Department of Financial Services, Ministry of Finance, has introduced the Credit Guarantee Scheme for Exporters (CGSE) to provide much-needed financial support to exporters. This initiative aims to address short-term liquidity mismatches and enable exporters to explore new markets, sustain production, and enhance competitiveness. Managed by the National Credit Guarantee Trustee Company Limited (NCGTC), the scheme offers 100% guarantee coverage to Member Lending Institutions (MLIs) for credit facilities extended to eligible exporters.
Key Features of CGSE
- Objective: The scheme incentivizes MLIs to provide additional credit facilities to exporters, helping them overcome liquidity challenges and expand their market reach.
- Eligibility:
- Direct Exporters: MSMEs with at least 5% of turnover through exports, and non-MSMEs with at least 20% of turnover through exports.
- Indirect Exporters: MSMEs supplying at least 30% of their turnover to direct exporters.
- Eligibility is based on export turnover in FY 2024 or FY 2025.
- Borrowers must have active working capital limits and be classified as Standard accounts (not exceeding 60 days overdue) as of September 30, 2025.
- Loan Amount:
- Up to 20% of sanctioned working capital limits (fund-based and non-fund-based).
- Maximum loan amount: ₹50 crore per borrower.
- Interest Rate: Loans under CGSE will be offered at 1% below the interest rate of existing working capital facilities, capped at 10% p.a. for banks/FIs and 14% p.a. for NBFCs.
- Tenure: Loans have a 4-year fixed tenure, including a 1-year moratorium. Repayment is in equal monthly installments after the moratorium.
- No Collateral or Guarantee: MLIs cannot ask for additional collateral, personal, or corporate guarantees for loans under CGSE.
- No Processing Fee: MLIs are prohibited from charging processing fees for loans under the scheme.
- Guarantee Coverage: NCGTC provides 100% credit guarantee coverage for loans under CGSE.
- Lock-in Period: A 6-month lock-in period applies before the guarantee can be invoked.
Eligibility Criteria for Exporters
The scheme is designed to support both direct and indirect exporters, including MSMEs. Direct exporters must meet specific export turnover thresholds, while indirect exporters must supply a significant portion of their turnover to direct exporters. The eligibility is determined based on the export turnover in the previous two financial years (FY 2024 and FY 2025).
Sectors Covered
The CGSE focuses on sectors impacted by recent US tariff hikes. Some of the key sectors include:
- Carpet: 59.79% of exports to the USA.
- Marine Products: 36.26% of exports to the USA.
- Ready-made Garments: 33.39% of exports to the USA.
- Gems and Jewellery: 33.34% of exports to the USA.
- Handicrafts (excluding handmade carpets): 32.76% of exports to the USA.
Exports in Drugs & Pharmaceuticals, Electronics, and Petroleum sectors are excluded from CGSE eligibility as they are not impacted by recent US tariffs. The list of eligible sectors will be updated based on future tariff changes.
How to Register as an MLI
Eligible lenders, including Scheduled Commercial Banks, Scheduled Urban Cooperative Banks, All India Financial Institutions, and NBFCs, can register as MLIs under CGSE by submitting a signed undertaking and a certified copy of their Board Resolution to NCGTC. Upon successful registration, MLIs will receive login credentials to apply for guarantee cover on loans sanctioned under the scheme.
Claim and Settlement Process
- NPA Marking: MLIs must mark accounts as NPA within 90 days of classification.
- Interim Claim: MLIs can lodge an interim claim after the lock-in period, receiving 75% of the default amount within 30 days of claim submission.
- Final Claim: The remaining 25% of the default amount is paid after recovery proceedings or settlement under One-Time Settlement (OTS).
- One-Time Settlement: Allowed after 1 year of legal proceedings, with guarantee cover reduced to 90% of the default amount.
Benefits of CGSE
- Enhanced Liquidity: Helps exporters manage short-term liquidity mismatches.
- Market Expansion: Encourages exploration of new markets, especially in the USA.
- No Additional Costs: No guarantee fee or processing fee is charged under the scheme.
- Ease of Access: Borrowers can apply through the Jan Samarth portal, ensuring a streamlined process.
Duration of the Scheme
The CGSE is available until guarantees for loans amounting to ₹20,000 crore are issued or until March 31, 2026, whichever is earlier.
Conclusion
The Credit Guarantee Scheme for Exporters (CGSE) is a transformative initiative by the Government of India to empower exporters, especially MSMEs, in navigating global challenges and seizing new opportunities. With 100% guarantee coverage, no collateral requirements, and streamlined processes, CGSE is set to bolster India’s export sector and contribute to the nation’s economic growth.
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Source: Ministry of Finance
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