MSME Minister Narayan Rane Introduces Rs 20 Lakh Scheme for GST-Exempted Micro Units under CGTMSE

MSME Minister Narayan Rane unveiled a special initiative targeted at Informal Micro Enterprises (IMEs), exempted from GST obligations to secure interest-free loans up to Rs 20 lakhs through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), administered by the government. Termed the ‘Special Provision for Informal Micro Enterprises under Credit Guarantee Scheme,’ this program is designed to alleviate credit risk concerns and facilitate easier access to credit for micro and nano enterprises.

Under this scheme, IMEs listed on the Udyam portal can avail of up to 85% guarantee coverage for unsecured loans of up to Rs 20 lakhs, as detailed in a circular issued by CGTMSE to its member lending institutions (MLIs) on February 14. The objective is to foster increased lending activity, meeting both the demand and supply sides of credit requirements for IMEs within the MSE sector.

Established in 2000, CGTMSE has recently surpassed Rs 1.50 lakh crore in guaranteed amounts for collateral-free loans to micro and small enterprises in the current fiscal year, compared to Rs 1.04 lakh crore in the previous fiscal year, marking a significant 50% increase. Finance Minister Nirmala Sitharaman had announced a fund infusion of Rs 9,000 crore into the CGTMSE corpus during her budget speech in 2023, aiming to enable an additional Rs 2 lakh crore in collateral-free credit to MSMEs and reduce credit costs by 1%.

As of now, nearly 1.41 crore IMEs are registered on the Udyam portal out of a total of 3.74 crore registered MSMEs. To facilitate IMEs’ registration on the Udyam portal and provide access to priority sector lending (PSL) benefits, the government had launched the Udyam Assist Platform as part of its MSME formalization project in January last year. This platform, initially proposed in a report by the standing committee on finance, seeks to seamlessly integrate IMEs into the growing digital ecosystem, including platforms like GeM, TReDS, and other digital marketplaces.