Government Launches Rs.20,000 Crore Collateral Free Loan Scheme for Exporters

Pradeep Singh

November 18, 2025

Collateral Free Loan Scheme for Exporters: The Indian government has approved a Credit Guarantee Scheme for Exporters (CGSE) to support both small and large exporters during rising global trade challenges. The Union Cabinet, led by Prime Minister Narendra Modi, approved the decision on November 12. Under this scheme, the National Credit Guarantee Trustee Company Limited (NCGTC) will provide a 100% credit guarantee.

The scheme will be carried out through the Department of Financial Services (DFS). NCGTC will give guarantees to banks and NBFCs so they can lend more easily to eligible exporters. A management committee, headed by the DFS Secretary, will check and review the progress of the scheme.

Key Features of the Credit Guarantee Scheme (CGSE): Collateral Free Loan Scheme for Exporters

Implementing Agency: National Credit Guarantee Trustee Company (NCGTC)
Eligible Borrowers: Direct and indirect exporters (eligibility criteria to be finalised by the Management Committee of the Scheme)
Quantum of Support:
- Up to 20% of sanctioned export working capital limit for direct exporters
- Up to 20% of working capital limit for indirect exporters
Maximum Loan Amount: Up to rupees 50 crore per borrower
Tenor: 4 years (including 1-year moratorium)
Guarantee Fee: Nil
Interest Rate: 1% below interest rate applicable on existing facility (as on the date of issue of guidelines)
Security: Charge on existing securities; no additional collateral required
Eligible Lending Institutions: Scheduled Commercial Banks, SUCBs, NBFCs (RBI-registered), and specified Financial Institutions
Validity of Scheme: Upto 31st March 2026 or until guarantees amounting to ?20,000 crore are issued, whichever is earlier.

The detailed operational guidelines will be issued by NCGTC in due course.

Four Major Benefits of the Scheme

It improves liquidity and cash flow for exporters.
It helps businesses get loans without offering collateral.
It gives major support to MSME exporters, who contribute nearly 45% of India’s total exports.
It encourages market diversification and helps exporters enter new global markets.

What was the need of Collateral Free Loan Scheme for Exporters (CGSE)?

Since August 2025, the United States has imposed a 50% tariff on Indian imports. This has badly affected MSME exporters. The new credit guarantee scheme aims to ease liquidity problems and help exporters explore new markets. The scheme follows earlier government planning in August–September 2025 to protect India’s goal of reaching $1 trillion in exports, despite US trade barriers.

Export-oriented industries provide jobs to more than 4.5 crore people and contribute 21% to India’s GDP in 2024–25. MSMEs play an important role in maintaining foreign exchange reserves and expanding India’s global trade presence. The new credit scheme is expected to improve liquidity, increase competitiveness, and support India’s long-term export goals.