Government Considers ECLGS-Style Credit Guarantee Program for MSMEs Amid West Asia Crisis

MSME Ministry Explores New Credit Guarantee Scheme Amid West Asia Crisis

The Ministry of Small and Medium Enterprises is in touch with the Department of Financial Services to explore an Emergency Credit Line Guarantee Scheme (ECLGS)-like credit guarantee scheme to support MSMEs amid the West Asia crisis, a senior official stated on Wednesday. According to Additional Secretary in the Ministry of Micro Small and Medium Enterprises (MSMEs) Rajneesh, the Ministry is in constant touch with the Department of Financial Services regarding a mechanism similar to ECLGS.

The ECLGS was launched in May 2020 as part of Aatmanirbhar Bharat Abhiyan to support eligible MSMEs and enterprises in meeting their operational liabilities and restarting their businesses in the context of the disruption caused by the COVID-19 pandemic. The scheme covers all sectors.

Field officers of the MSME Ministry are in constant touch with MSME associations and the National Small Industries Corporation (NSIC) to provide domestic bulk raw materials to MSMEs. Notably, in the last three months, more than 1 lakh metric tonne of raw material has been provided. A year-to-year comparison of March figures shows a 12.5 per cent increase.

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The MSME Ministry continues to engage with all stakeholders and believes in a holistic government approach, with the situation being closely monitored by the ministry. The ministry is conducting stakeholder consultations regularly with all MSME associations at the central, state, and sub-state levels, and all field offices of the ministry are constantly in touch with them.

Despite global headwinds, more than 20 lakh micro, small, and medium enterprises have registered on the Udyam portal of the ministry in February and March. This is a sign of resilience of the MSMEs of India, and the total number of MSMEs registered with the ministry has crossed more than 8 crore.

The credit flow in the micro, small, and medium enterprises is one of the core areas on which the ministry works. Notably, the credit outstanding with the micro, small, and medium enterprises stands at over Rs 36.7 lakh crore. In the last quarter, January, February, and March, the growth in credit flow to the MSMEs has been 23.5 per cent.

To address the needs of MSMEs, the RBI has doubled the limit for collateral-free lending from up to Rs 10 lakh to Rs 20 lakh for the micro and small enterprises, effective from April 1, 2026. In February and March, the total credit guarantees that the ministry has given to the micro and small enterprises are more than 5.27 lakh, and the total value of these credit guarantees is more than Rs 92,000 crore.

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To enhance the liquidity flow to the MSMEs, the TREDS platform has been developed. It has been in operation for the last 4-5 years, and the number of transactions and the volume of bills discounted have increased from Rs 4,300 crore in 2022 to more than Rs 7 lakh crore as of now.

The RELIEF Scheme rolled out by the Department of Commerce under the Export Promotion Mission on March 19 provides reimbursement of up to 50 per cent of the additional freight and insurance surcharge to the non-ECGC and MSME exporters.