Credit guarantee scheme for exporters in last leg of consultations, rollout likely by December-end

The Union Cabinet, on November 12, approved Rs 20,000 crore for the credit guarantee scheme for exporters

The central government is in the final stage of consultations on the proposed Credit Guarantee Scheme for Exporters (CGSE), with a crucial meeting scheduled on December 10 involving key export promotion councils, a source in the know of the matter said.

The scheme is expected to be operational by the end of this month, with key features, such as whether it will mirror the earlier Emergency Credit Line Guarantee Scheme (ECLGS), applicable interest rates, moratorium period, eligibility, and the processing mechanism, still under discussion, the source added.

The ECLGS was a COVID-19 relief initiative launched by the government in 2020 to support MSMEs, businesses, and other eligible entities impacted by the pandemic.

“The CGSE is likely to be implemented by this month. It is the last leg of consultations. The government is holding meetings with relevant stakeholders on the design of the scheme,” this source said.

The Union Cabinet, on November 12, approved Rs 20,000 crore for the credit guarantee scheme for exporters, to be implemented by the Department of Financial Services (DFS) through the National Credit Guarantee Trustee Company (NCGTC).

A management committee, chaired by the Secretary of DFS, will oversee its implementation.

Moneycontrol had reported earlier that the central government’s CGSE may offer up to Rs 50 crore per borrower in additional working capital with 100 percent guarantee coverage through the NCGTC.

The facility will likely cover both direct and indirect exporters, offering additional term or working capital loans at interest rates 1 percent lower, with no fees or extra collateral. It is expected to remain open until March 31, 2026, or until guarantees worth Rs 20,000 crore are issued, with each loan having a tenure of four years, including a one-year moratorium on repayment.

The move came amid exporters urging the Centre for liquidity relief after US President Donald Trump imposed 50 percent tariffs on most Indian goods.

To be sure, India’s exports to the US rose in October over September, despite steep tariffs, though on a year-on-year basis it declined 8.6 percent.

According to the government’s estimate, Indian exports worth roughly $48.2 billion are facing 50 percent tariffs from August 27.

India exported goods worth $86.51 billion to the US in FY25, out of which the top five account for almost $60 billion of all outbound shipments to American shores.

Last month, the Reserve Bank of India too announced relief measures for exporters in certain labour-intensive sectors, allowing banks and finance companies to grant a moratorium on loans for a limited period.

These steps are expected to provide major competitive boost to domestic exporters as they seek to diversify their shipments into new and emerging markets.