New Delhi: To ease credit access for startups and fuel innovation in priority sectors, the government has doubled the guarantee cover under its Credit Guarantee Scheme for Startups (CGSS), raising the limit per borrower from ₹10 crore to ₹20 crore.
The move comes amid tightening funding conditions, with startups calling for stronger institutional support as private capital flows dry up.
The revised scheme, notified by the Department for Promotion of Industry and Internal Trade (DPIIT) on Friday, also increases the extent of guarantee cover to 85% for loans up to ₹10 crore and 75% for loans above that threshold. The government is positioning the expanded coverage as a way for startups to secure working capital, term loans, and venture debt, key to sustaining R&D and product development.
“With increased collateral-free credit support and enhanced guarantee cover, this move is set to boost startup growth. Additionally, to foster domestic manufacturing and Aatmanirbharta, 27 champion sectors under Make in India will benefit from a reduced annual guarantee fee,” Piyush Goyal, union minister for commerce and industry, said in a post on X.
The Annual Guarantee Fee (AGF) for startups in 27 identified champion sectors has been slashed from 2% to 1% per annum. These sectors, identified under the ‘Make in India’ initiative, include advanced manufacturing, electronics, defence, food processing, and clean energy.
“The reduced guarantee fee and expanded cover will make formal credit more accessible and attractive for startups, especially those innovating in critical sectors. This will not only reduce dependence on equity capital but also deepen the debt ecosystem,” said Sanjiv Singh, joint secretary, DPIIT, told Mint.
