The Centre on Friday notified an expansion of the Credit Guarantee Scheme for Startups (CGSS). The revised scheme significantly enhances guarantee coverage and reduces associated fees, in a bid to ease access to debt funding for early-stage and innovation-driven enterprises.
The Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry, announced that the ceiling on guarantee cover per borrower under the CGSS has been raised from ₹10 crore to ₹20 crore. Simultaneously, the extent of guarantee coverage has been revised to 85% of the amount in default for loan amounts up to ₹10 crore and 75% for amounts exceeding that limit.
The scheme also offers a reduced Annual Guarantee Fee (AGF) for startups operating within 27 identified Champion Sectors. The AGF for these sectors has been halved from 2% per annum to 1%, in a move designed to encourage innovation in areas critical to India’s manufacturing and services ambitions under the ‘Make in India’ initiative. These Champion Sectors were earlier recognised by the Government to help accelerate industrial self-reliance and technological advancement.
“The expanded scheme will further reduce the perceived risks associated with lending to startups in established financial institutions, enabling greater financial flow and runway for startups to undertake research and development, experimentation, and create cutting-edge innovation and technologies,” the DPIIT said in a statement.
The CGSS expansion is in line with the broader vision of Prime Minister Narendra Modi to transform India into a self-reliant, innovation-led economy. The Government anticipates that the increased guarantee cover and enhanced risk-sharing mechanism will incentivise more financial institutions to extend debt support to startups. This, in turn, is expected to increase the overall volume of startup financing in the country.
The CGSS was first notified on October 6, 2022, following the launch of the Startup India initiative by the Prime Minister on January 16, 2016. The scheme provides guarantee coverage against credit instruments offered to eligible startups by Scheduled Commercial Banks, All India Financial Institutions (AIFIs), Non-Banking Financial Companies (NBFCs), and SEBI-registered Alternative Investment Funds (AIFs). The primary aim is to make collateral-free debt funding more accessible through instruments such as working capital, term loans, and venture debt.
The DPIIT noted that several operational reforms and enabling measures, developed in consultation with stakeholders from the startup ecosystem, have also been incorporated in the updated CGSS framework. These additions are intended to make the scheme more appealing both to lenders and to startups seeking financial support.
The announcement follows proposals made in the Union Budget 2025–26, which called for enhanced credit availability with a broader guarantee cover as part of the Government’s efforts to deepen the startup ecosystem. With the latest revisions, the Government hopes to position CGSS as a key pillar in building a “Viksit Bharat” — a developed India rooted in innovation and economic inclusion.