Getting an export order is only half the battle for a small business. The exporter may still need substantial working capital to purchase raw materials, manufacture goods, ship the order and wait for payment from the overseas buyer.
For many MSMEs, the biggest obstacle is collateral.
A new intervention under the Export Promotion Mission (EPM) – Niryat Protsahan is aimed at addressing this problem.
Under the Collateral Support for Export Credit initiative, eligible MSME exporters can receive guarantee support for eligible export credit facilities without collateral security and third-party guarantees, subject to the scheme’s conditions.
For eligible Micro and Small Enterprises (MSEs), total guarantee coverage can go up to 85%, while eligible Medium Enterprises can receive up to 65% coverage. The guarantee ceiling is ₹10 crore per exporter.
But there is an important distinction:
CGTMSE does not directly lend money to exporters. The loan comes from an eligible bank or lending institution, while the guarantee helps reduce the lender’s risk.
What Is the CGTMSE Export Credit Guarantee?
The Collateral Support for Export Credit initiative is part of the government’s Export Promotion Mission – Niryat Protsahan.
It is designed to improve access to export finance for eligible Indian MSME exporters that may not have sufficient collateral.
The mechanism broadly works like this:
MSME exporter → applies through the prescribed process → approaches eligible lender → lender sanctions export credit → CGTMSE provides eligible guarantee coverage.
The objective is to encourage lenders to provide export-related working capital to eligible MSMEs that might otherwise find it difficult to obtain finance.
How Much Guarantee Coverage Can MSME Exporters Get?
The coverage depends on the category of the enterprise.
| Enterprise | Maximum guarantee coverage | Guarantee ceiling |
|---|---|---|
| Micro & Small Enterprise | Up to 85% | ₹10 crore |
| Medium Enterprise | Up to 65% | ₹10 crore |
For eligible Micro and Small Enterprises, the 85% coverage consists of:
- 75% CGTMSE coverage
- 10% DGFT support
For eligible Medium Enterprises, the coverage is up to 65% under the applicable framework.
Does an 85% guarantee mean the government gives 85% of the loan?
No.
The guarantee is provided to the lender against eligible credit risk. It is not a subsidy or cash payment to the exporter.
The exporter remains responsible for repaying the entire loan according to the terms agreed with the lender.
Can MSME Exporters Get Loans Without Collateral?
Eligible exporters can obtain covered export credit without collateral security and third-party guarantees, subject to the scheme requirements and approval by the lending institution.
The intervention covers eligible export-related working-capital facilities, including pre-shipment and post-shipment export credit.
There is also a Hybrid Security Model.
Under this arrangement, the lender may take collateral for part of the credit facility, while the remaining eligible portion can receive guarantee coverage.
Therefore, exporters should ask their bank whether their proposed facility can be covered under the Collateral Support for Export Credit framework.
Who Is Eligible?
The scheme framework covers eligible manufacturer exporters and merchant exporters, subject to the applicable conditions.
Key requirements include:
Valid Udyam Registration
The exporter must have a valid Udyam Registration Number.
Active IEC
The exporter must have a valid and active Importer-Exporter Code (IEC).
Eligible Export Product
The export must fall under the notified positive list of eligible six-digit HSN/tariff lines.
The eligible product list may be reviewed periodically.
No Minimum Export Threshold
The scheme framework does not link eligibility to a minimum export threshold.
However, satisfying these conditions does not guarantee loan approval. The lender will still conduct its own credit assessment.
What Type of Export Credit Is Covered?
The scheme is intended for eligible export-related working-capital finance.
This can include:
- Pre-shipment export credit
- Post-shipment export credit
- Other eligible export working-capital facilities covered by the framework
It is not a general-purpose guarantee for ordinary domestic business loans.
What Is Pre-Shipment Export Finance?
Pre-shipment finance is credit provided before the exporter ships the goods.
For example, an MSME receives an export order worth ₹30 lakh but needs money to:
- purchase raw materials
- manufacture the products
- pay labour
- package the goods
- transport them
- complete other export-related activities
Eligible pre-shipment finance can help the exporter fulfil the order without using all of its own cash.
What Is Post-Shipment Export Finance?
Post-shipment finance helps an exporter manage the period between shipping the goods and receiving payment from the overseas buyer.
For example, if an overseas buyer has agreed to pay 60 days after shipment, the exporter may need working capital during those 60 days.
Post-shipment finance can help bridge this cash-flow gap.
How Can an MSME Exporter Apply?
The scheme uses an online process involving the DGFT portal.
The broad process is:
Step 1: Submit the application
The eligible exporter submits the prescribed online application.
Step 2: Obtain the UIN
A Unique Identification Number (UIN) is generated after submission.
Step 3: Approach a lending institution
The exporter approaches an eligible Member Lending Institution (MLI) and provides the UIN while applying for export credit.
Step 4: Bank evaluates the proposal
The lender carries out its normal credit assessment and due diligence.
Step 5: Loan is sanctioned
If the lender approves the eligible export credit facility, it submits the relevant application to CGTMSE for guarantee coverage.
Step 6: Guarantee coverage
CGTMSE verifies the application and, where the applicable requirements are satisfied, provides the guarantee coverage.
The important point is that the guarantee does not replace the bank’s credit assessment.
Which Lending Institutions Can Provide the Credit?
Eligible Member Lending Institutions (MLIs) can provide covered export credit.
The framework includes eligible:
- Public sector banks
- Private sector banks
- Foreign banks
- Scheduled commercial banks
- Certain financial institutions registered with CGTMSE
Exporters should confirm with their bank whether the particular branch/facility is being processed under the applicable scheme.
Example: How the Guarantee Could Help an Exporter
Suppose a Micro Enterprise receives a genuine export order and requires ₹2 crore of working capital.
The business does not have sufficient property or other collateral.
If the proposed facility satisfies the scheme conditions and the lender approves it under the framework, the eligible MSE could receive guarantee coverage of up to 85%.
However:
The bank provides the ₹2 crore credit.
The guarantee protects the lender for the eligible guaranteed portion.
The exporter remains responsible for repaying the ₹2 crore borrowing.
So, the real benefit is improved access to export finance, rather than free funding from the government.
Is the Scheme Completely Collateral-Free?
For eligible facilities under the standard structure, the scheme provides support without collateral security and third-party guarantees.
However, the framework also permits a Partial Collateral Security / Hybrid Model.
This means exporters should not assume that every loan application will automatically be processed without collateral.
The exact structure will depend on:
- the export-credit facility
- eligibility
- lender assessment
- scheme conditions
- the amount of collateral, if any, required under the hybrid structure.
CGTMSE Export Credit Guarantee vs Regular CGTMSE
The two should not be confused.
| Feature | Regular CGTMSE | Export Credit Support |
|---|---|---|
| Main target | Eligible MSEs | Eligible MSME exporters |
| Purpose | Eligible business credit | Export-related credit |
| IEC | Not generally required | Required |
| Export activity | Not required | Required |
| Udyam | Applicable | Required |
| MSE guarantee coverage | Depends on applicable scheme | Up to 85% |
| Medium enterprise coverage | Regular scheme conditions | Up to 65% |
| Guarantee ceiling | Up to ₹10 crore under current framework | ₹10 crore per exporter, subject to conditions |
The export intervention is therefore a targeted export-finance mechanism, rather than simply another name for the ordinary CGTMSE scheme.
What Are the Main Benefits for MSME Exporters?
The scheme could be especially useful for exporters facing:
Lack of collateral
A growing exporter may have good orders but limited property or other assets to pledge.
Working-capital shortages
Production and shipping expenses arise before the overseas buyer makes payment.
Larger export orders
A business may need additional finance to accept larger orders without exhausting its own cash.
Delayed export payments
Post-shipment finance can help manage the gap between shipment and payment.
Difficulty accessing bank credit
A government-backed guarantee can potentially make lenders more comfortable with eligible export-credit proposals.
What Should MSME Exporters Check Before Applying?
Before approaching a lender, an exporter should check:
1. Udyam Registration
Make sure your Udyam details are valid and updated.
2. IEC
Confirm that your Importer-Exporter Code is active.
3. Product eligibility
Check whether your export product falls under the notified eligible HSN/tariff list.
4. Export requirement
Determine whether you need pre-shipment or post-shipment finance.
5. Financial records
Keep bank statements, financial statements, tax records and other credit documents ready.
6. Export documents
Keep purchase orders, export contracts, invoices and other relevant documents available.
7. Ask the lender specifically about the scheme
Don’t simply ask for a “CGTMSE loan.” Tell the bank that you want to explore the Collateral Support for Export Credit under the Export Promotion Mission.
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Important: A Guarantee Does Not Mean Automatic Loan Approval
This is the most important point exporters should understand.
Even if an exporter meets the basic scheme requirements, the bank can still reject the credit application.
The lender may consider:
- repayment capacity
- financial performance
- existing debt
- banking history
- credit history
- export orders
- buyer risk
- business viability
- compliance
- other internal lending criteria
Therefore:
Eligibility for the guarantee ≠ automatic eligibility for the loan.
Frequently Asked Questions
Can MSME exporters get collateral-free export loans through CGTMSE?
Eligible MSME exporters can receive guarantee-backed support for covered export credit without collateral security and third-party guarantees, subject to the scheme conditions and lender approval.
What is the maximum guarantee coverage?
For eligible Micro and Small Enterprises, total coverage can go up to 85%. For eligible Medium Enterprises, it can go up to 65%.
What is the maximum guarantee ceiling?
The applicable guarantee ceiling is ₹10 crore per exporter, subject to the scheme’s conditions.
Is Udyam Registration required?
Yes. The scheme requires eligible exporters to have a valid Udyam Registration Number.
Is an IEC required?
Yes. The exporter must have a valid and active IEC.
Can merchant exporters apply?
Yes. The framework covers eligible merchant exporters as well as manufacturer exporters.
Is there a minimum export turnover requirement?
The scheme framework does not specify a minimum export threshold for eligibility. Other scheme requirements still apply.
Does CGTMSE give the loan directly?
No. The lending institution provides the credit. CGTMSE provides guarantee support for eligible facilities.
Can the bank still ask for collateral?
Depending on the facility and structure, collateral requirements may differ. The scheme also permits a hybrid model in which part of the facility may be secured while the remaining eligible portion receives guarantee coverage.
Is the ₹10 crore amount a government grant?
No. The ₹10 crore figure refers to the guarantee ceiling, not a grant or free loan.
BusinessZindagi Take
The new export-credit guarantee support could be particularly useful for Indian MSMEs that have genuine international orders but lack the collateral normally demanded for larger working-capital facilities.
For eligible Micro and Small Enterprises, up to 85% guarantee coverage is potentially significant.
However, exporters should keep their expectations realistic.
The government guarantee can reduce the lender’s risk, but it does not:
- give the exporter free money
- guarantee loan approval
- eliminate interest
- remove the borrower’s repayment obligation
- automatically make every export product eligible
If you are an MSME exporter facing a collateral problem, the most practical step is to check your Udyam registration, active IEC and product eligibility, then approach an eligible lender and specifically ask about the Collateral Support for Export Credit under the Export Promotion Mission – Niryat Protsahan.
Official Sources
CGTMSE:
Official CGTMSE website
Ministry of MSME:
Official Ministry of MSME website
Final Word
For an exporter, getting an order is not enough. Access to working capital can determine whether the business can actually fulfil that order.
The CGTMSE-backed export-credit intervention attempts to solve one of the most common barriers faced by smaller exporters: insufficient collateral.
If implemented effectively through banks and other eligible lenders, it could give more Indian MSMEs the ability to accept larger export orders and grow internationally without having to pledge substantial assets.
Last updated: September 2026
Disclaimer: Government schemes, eligibility requirements, product lists, guarantee coverage and application procedures can change. This article is for informational purposes only. Exporters should verify the latest rules with CGTMSE, DGFT and their lending institution before applying.
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