Lok Sabha Question No. 6349 (UNSTARRED), answered on 2026-04-02
Subject: Scaling up of MSMEs
Ministry: MICRO, SMALL AND MEDIUM ENTERPRISES
Asked by: Shri Rajesh Naranbhai Chudasama

## GOVERNMENT OF INDIA MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES

## LOK SABHA UNSTARRED QUESTION NO. 6349 TO BE ANSWERED ON 02.04.2026

## SCALING UP OF MSMEs

## 6349. SHRI RAJESH NARANBHAI CHUDASAMA:

Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:

- (a) the  specific  mechanisms  proposed  to  be  put  in  place  to  ensure  that  Micro,  Small  and  Medium Enterprises (MSMEs) can effectively scale up to meet the revised investment and turnover limits;
- (b) the steps proposed to be taken to ensure that banks and financial institutions actually extend the enhanced credit guarantee cover to eligible MSMEs and startups;
- (c) the  safeguards  that  are  in  place  to  prevent  misuse  of  credit  schemes  or  fraudulent  loan applications; and
- (d) whether  there  would  be  any  special  provisions  for  rural  and  women-led  micro  enterprises  to access these credit cards easily and if so, the details thereof?

## ANSWER

## MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES (SUSHRI SHOBHA KARANDLAJE)

(a): To help them achieve higher efficiencies of scale, technological upgradation and better access to capital,  the  investment  and  turnover  limits  for  classification  of  all  MSMEs  are  enhanced  to  2.5  and  2 times, respectively.

Subsequently,  the  steps  taken  by  the  Government  to  ensure  that  Micro,  Small  and  Medium Enterprises (MSMEs) can effectively scale up are as under:

- i. Non-tax benefits extended for 3 years in case of an upward change in status of MSMEs.
- ii. Under  the  Credit  Guarantee  Scheme  (CGS)  for  Micro  and  Small  Enterprises  (MSEs)  through Credit  Guarantee  Fund  Trust  for  Micro  and  Small  Enterprises  (CGTMSE)  to  provide  credit guarantee for loans extended to MSEs. The ceiling for guarantee coverage under the scheme is Rs 10 crore.
- iii. Government of India vide notification S. O. 4845(E) dated 07.11.2024 directed CPSEs and all companies  with  the  turnover  of  Rs.250  Crore  or  more  to  on-board  the  Trade  Receivables Discounting  System  (TReDS),  an  electronic  platform  for  facilitating  the  discounting  of  trade receivables of MSMEs through multiple financers.
- iv. The government has introduced Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME), a government-backed initiative designed to help Micro, Small, and Medium Enterprises (MSMEs) access loans to grow their businesses. This scheme offers a credit guarantee, making it easier for MSMEs  to  obtain  loans,  especially  for  purchasing  essential  equipment  and  machinery.  The Scheme  provides  credit  guarantee  cover  to  lenders  (Scheduled  Commercial  Banks,  All  India Financial Institutions, NBFCs for their term loans up to Rs.100 crore to MSMEs for their projects involving purchase of equipment/machinery.

The following measures have been announced in Budget Announcements 2026-27:

- (i)   To strengthen equity financing for MSMEs, a dedicated ₹10,000 crore SME Growth Fund has been announced to promote high-growth enterprises based on defined eligibility criteria. Further, the  Self-Reliant  India  (SRI)  Fund,  established  in  2021,  is  being  augmented  with an  additional ₹2,000 crore to continue supporting micro enterprises through risk capital.
- (ii)  To  further  enhance  liquidity,  the  Government  has  proposed  measures  including  mandating TReDS  for  settlement  of  MSME  purchases  by  CPSEs;  introducing  CGTMSE-backed  credit guarantee support for invoice discounting on TReDS; integrating GeM with TReDS to facilitate faster  credit  flow  to  MSME  suppliers;  and  enabling  TReDS  receivables  as  asset-backed securities to deepen the secondary market and improve liquidity.

(b): As informed by Reserve Bank of India (RBI), S cheduled Commercial Banks SCBs have been mandated not to accept collateral security in the case of loans up to ₹10 lakh extended to units in the MSE sector. The above limit has been enhanced to ₹20 lakh which shall be applicable to all new loans to MSEs sanctioned or renewed on or after April 01, 2026.

RBI has also encouraged financial institutions to offer collateral free lending under the CGTMSE scheme thereby prescribing zero risk weight for the loan portion covered under the CGTMSE.

Government  of  India  approved  the  Credit  Guarantee  Scheme  for  Exporters  (CGSE)  on 12.11.2025 to provide additional credit support up to 20% of existing working capital limits to eligible borrowers,  particularly  MSMEs.  By  enabling  collateral-free  credit  access  under  CGSE,  the  Scheme  is expected to enhance the global competitiveness of Indian exporters and support diversification into new and emerging markets. The facility has been made operational w.e.f. 25.11.2025 on pan-India basis.

(c): As informed by Department of Financial Services (DFS), A New Credit assessment model has been launched  for  Micro,  Small  &  Medium  Enterprises.  This  credit  assessment  model  leverages  the digitally fetched and verifiable data available in the ecosystem and devise automated journeys for MSME Loan appraisal using objective decision for all loan applications and model-based limit assessment for both Existing to Bank (ETB) as well as New to Bank (NTB) MSME borrowers. All the Public Sector Banks (PSBs) have the model live for their ETB and NTB customers.

All  credit  related  schemes  of  Ministry  of  Micro,  Small  and  Medium  Enterprises  (MSMEs)  are implemented through Banks/Financial Institutions. Further, Ministry of MSME, through its field offices, regularly  organizes  outreach  programmes  in  coordination  with  MSME/  Industry  Departments  of States/UTs concerned and other stakeholders such as Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE),  Small  Industries  Development  Bank  of India  (SIDBI),  Banks,  MSME Associations  etc.  to  create  awareness  and  disseminate  information  among  MSMEs  in  the  country. Ministry  of  MSME,  vide  letter  no.  No.  1(12)/CLCSS/Misc/Fake  Loans  /2020-21  dated  18.09.2020, issued advisory to all MSMEs not to fall prey to offers made by such fraudsters either directly or through website/phone calls etc.

- (d): The Government has taken a number of initiatives to increase the accessibility to credit for rural and women-led micro enterprises such as:
- i. Ministry of MSME implements Prime Minister's Employment Generation Programme (PMEGP) which  is  a  credit-linked  subsidy  programme  aimed  at  generating  self-employment  opportunities through  establishment  of  micro-enterprises  in  the  non-farm  sector  by  helping  traditional  artisans and rural/urban unemployed youth. Out of the total PMEGP beneficiaries, 39% are women and they are provided higher subsidy (35%) vis-a-vis non-special category (upto 25%).
- ii. To support women entrepreneurs under Credit Guarantee Scheme for Micro and Small Enterprises (MSEs),  the following two provisions have been introduced  for  women-led  MSEs  w.e.f. 01.12.2022:
1. Guarantee coverage of up to 90% as against the 75% for others; and
2. 10% concession in annual Guarantee fees
- iii. Participation  of  women  entrepreneurs  in  trade  fairs  under  Procurement  and  Marketing  Support Scheme is subsidized to the extent of 100% vis-a-vis 80% for other entrepreneurs.
- iv. The  Ministry  has  launched  the  awareness  campaign  'Yashasvini'  to  create  awareness  among existing  and  aspiring  women  entrepreneurs  with  various  schemes  of  the  Ministry  of  MSME, providing them with continuum of support through handholding, mentorship, and capacity building.
- v. Subsequent to Union Budget Announcement 2024-25, SIDBI has opened 61 branches across India during  the  period  of  01.04.2024  till  16.03.2026.  Further,  in  compliance  with  the  said  budget announcement,  SIDBI  will  continue  to  open  new  branches  to  expand  its  reach  to  serve  major MSME clusters by 31.03.2027.

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