Government Increase the Credit Guarantee for Startups to Rs 20 crore

The government of India has increased the credit guarantee to the eligible startups under the Credit Guarantee Scheme for Startups to Rs 20 crore from the present Rs 10 crore per borrower. This was notified by the Department for Promotion of Industry and Internal Trade (DPIIT), under the Union Ministry of Commerce and Industry, on 9 May 2025.

The DPIIT is the nodal body for implementing the Startup India Scheme for the Government of India.

In the 2025-26 Union Budget speech, the Union Finance Minister Nirmala Sitharaman announced an increase in credit guarantee coverage to Rs 20 crore.

The increase in the credit guarantee amount is intended to facilitate greater funding for startups by significantly reducing lenders' risk.

Changes in the Credit Guarantee Scheme for Startups

The following changes have been made in the Credit Guarantee Scheme for Startups. 

• The counter guarantee on startup loans has been increased from Rs 10 crore to Rs 20 crore.
• The loan default coverage has been increased to 85% of the default loan amount for loans up to Rs 10 crore.
• The loan default coverage has been increased to 75% of the default loan amount for loans of more than Rs 10 lakh and up to Rs 20 lakh.
• The Annual Guarantee Fee for startups in 27 Champion Sectors has been reduced to 1% from  2%  per year.

What is the Credit Guarantee Scheme for Startups?

The Credit Guarantee Scheme for Startups was launched by the government of India in 2022.

Aim 

• To provide credit guarantees on loans by eligible financial institutions to the DPIIT-recognised startups.
• The eligible financial institutions are Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs), and Venture Debt Funds (VDFs) under SEBI-registered Alternative Investment Funds.
• The guarantee is not provided directly by the DPIIT but through the National Credit Guarantee Trustee Company Ltd (NCGTC).

National Credit Guarantee Trustee Company Ltd (NCGTC)

• The NCGTC was set up by the government of India in March 2014 under the Companies Act 1956.
• It is under the Department of Financial Services, Union Ministry of Finance.
• The NCGTC is a common trustee company that manages various credit guarantee funds launched by the government of India.

Start Up India and Champions Startup 

• The government of India launched the Startup India scheme on 16th January 2016.
• It aims to build a vibrant startup ecosystem in the country and to support entrepreneurs.
• The nodal body to implement the Startup India is DPIIT.

Champion Startups 

DPIIT has recognised 27 sectors as champion sectors, which include 15 manufacturing sectors and 12 service sectors.

The manufacturing sectors include automotive and auto components, aerospace and defence, pharmaceuticals and medical devices, chemicals and petrochemicals, bio-technology, electronics system design and manufacturing.  

Information Technology & Information Technology-enabled Services (IT &ITeS), medical value travel, tourism and hospitality, accounting and finance services, and audiovisual services are some of the service sectors under Champion Startups.