The Indian government has expanded the Credit Guarantee Scheme for Startups (CGSS) to increase capital mobilisation and encourage innovation-driven entrepreneurship.
The newly modified scheme raises the guarantee cover per borrower from Rs. 10 crore to Rs. 20 crore, aiming to provide easier access to funding for startups across India.
Under the revised scheme, 85% guarantee coverage will be offered for loan amounts up to Rs. 10 crore, while 75% coverage will be applicable for loans exceeding this threshold. In addition, the Annual Guarantee Fee (AGF) for startups operating in 27 Champion Sectors has been reduced from 2% to 1% per annum, making credit more attractive for businesses in key industries identified under the Make in India initiative.
The changes align with Prime Minister Narendra Modi’s vision of fostering an innovation-driven and self-reliant economy, enabling financial institutions to reduce lending risks and expand funding opportunities for startups. The enhanced coverage will offer greater financial flexibility for startups to focus on research, development, and cutting-edge technological innovations.
According to industry experts, the CGSS expansion is expected to increase the number of lenders willing to offer early-stage debt financing for startups, ultimately strengthening India’s startup ecosystem and contributing to the country’s vision of becoming a global innovation hub.
