Introduction: Mutual Credit Guarantee Scheme for MSMEs Launched
On February 17, 2025, Finance Minister Nirmala Sitharaman launched the Mutual Credit Guarantee Scheme for MSMEs (MCGS) under the Union Budget 2025-26. The scheme aims to support Micro, Small, and Medium Enterprises (MSMEs) by providing collateral-free loans to purchase machinery and equipment. This initiative is set to significantly boost India’s manufacturing sector and improve the ease of doing business.
Key Features of the Mutual Credit Guarantee Scheme for MSMEs
The Mutual Credit Guarantee Scheme for MSMEs offers loans of up to ₹100 crore to eligible MSMEs. The National Credit Guarantee Trustee Company Ltd (NCGTC) provides a 60% guarantee on these loans. Businesses can use the loans to purchase plant machinery or equipment, helping them enhance operational capacity. To qualify, businesses must have a valid Udyam Registration Number. While the total project cost may exceed ₹100 crore, at least 75% of the funds must be spent on machinery or equipment.
Supporting MSMEs and Boosting the Manufacturing Sector
The Mutual Credit Guarantee Scheme for MSMEs facilitates easier access to credit, enhancing the financial stability of MSMEs and aiding their growth. This scheme directly contributes to boosting India’s manufacturing sector. Furthermore, it helps improve the ease of doing business, promoting sustainable growth in the MSME ecosystem. As the government strengthens the entrepreneurial landscape, this initiative will drive economic development in India.
SWAMIH Fund Expands to Deliver More Homes
Alongside the launch, FM Sitharaman also announced the expansion of the SWAMIH Fund (Special Window for Affordable and Mid-Income Housing). As of January 2025, the fund has delivered over 50,000 homes. The fund will continue to support affordable housing projects. During the launch, FM Sitharaman handed over keys to several homebuyers who benefited from the scheme.
Additionally, the government introduced SWAMIH Fund 2, a ₹15,000 crore blended finance facility. This initiative aims to complete 1 lakh homes over the next few years, contributing significantly to affordable housing in India.
Focus on MSMEs and Insurance Sector Reforms
FM Sitharaman emphasized the government’s focus on MSMEs and highlighted ongoing reforms in the insurance sector. Notably, the Union Budget 2025-26 proposes raising the FDI cap in insurance from 74% to 100%. These reforms are expected to make the insurance sector more competitive while keeping premium payments within India.
The government is committed to strengthening critical sectors through capital expenditure. This long-term focus on growth and development will drive India’s economic progress.
Conclusion: A Strong Move for MSMEs and the Economy
The launch of the Mutual Credit Guarantee Scheme for MSMEs and the expansion of the SWAMIH Fund demonstrate the government’s commitment to bolstering the Indian economy. These initiatives will support key sectors like MSMEs and affordable housing, driving sustainable growth and development across the country.
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