₹20 Cr Loan Cap Approved Under Expanded CGSS

The Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, has announced a major expansion of the Credit Guarantee Scheme for Startups (CGSS). As per the notification, the ceiling on guarantee cover per borrower has been increased from ₹10 crore to ₹20 crore. The scheme is aimed at improving access to credit for startups and supporting India’s innovation-driven economy.

Under the modified terms, the guarantee cover will now extend to 85% of the default amount for loans up to ₹10 crore and 75% for loans exceeding that amount. This move is expected to encourage more financial institutions to extend credit to startups by mitigating perceived lending risks.

Champion sectors receive special support

In a significant step to incentivize specific high-potential industries, the Annual Guarantee Fee (AGF) for startups operating in 27 Champion Sectors has been reduced from 2% to 1% per annum. These sectors, identified under the government’s Make in India initiative, are expected to benefit from easier and more cost-effective access to funding.

This fee reduction is designed to stimulate innovation in domestic manufacturing and services, helping further the goals of self-reliance and global competitiveness.

Encouraging early-stage funding through lender participation

The enhanced guarantee support is expected to draw greater participation from scheduled commercial banks, All India Financial Institutions (AIFIs), NBFCs, and SEBI-registered Alternative Investment Funds (AIFs). With expanded risk coverage, these institutions will be better positioned to provide term loans, working capital, and venture debt to startups.

Additionally, startups seeking funds for research, product development, and experimental technologies will have improved access to non-collateralised debt instruments, giving them a wider runway for growth.

Operational reforms to improve implementation

The updated CGSS includes several operational improvements developed in consultation with stakeholders in the startup ecosystem. These reforms aim to make the scheme more user-friendly and effective for both lenders and borrowers, and are expected to broaden the scope of startups that can benefit from the programme.

Originally launched in October 2022 as part of the broader Startup India initiative, the CGSS was designed to offer credit guarantees for startup funding without collateral. The current expansion aligns with the goals outlined in the Union Budget 2025-26, which proposed increased credit availability with government-backed guarantees to empower early-stage ventures.

The government expects these changes to significantly boost the availability of capital for innovative startups and help propel India toward its goal of becoming a Viksit Bharat (Developed India).