The government’s launch of the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) marks a significant policy intervention aimed at addressing the financial challenges faced by micro, small, and medium enterprises (MSMEs). Covering loans of up to Rs 100 crore, the scheme is expected to attract more investments, boost manufacturing, and strengthen India’s export potential.
This move is particularly beneficial for the dairy sector, which has long struggled with limited access to affordable credit for capital investments. With a growing demand for value-added dairy products, advanced processing infrastructure, and improved cold chain logistics, access to finance will be a game changer for dairy entrepreneurs.
Key Features of the MSME Credit Guarantee Scheme
The newly introduced MCGS-MSME offers:
- 60% guarantee coverage by the National Credit Guarantee Trustee Company Ltd (NCGTC) for credit facilities up to Rs 100 crore.
- Loans applicable for purchasing equipment and machinery, crucial for scaling up production.
- Eligibility for MSMEs with a valid Udyam Registration Number.
- A project cost that can exceed Rs 100 crore, provided at least 75% of the investment is in equipment/machinery.
This initiative aligns with the government’s vision of ‘Make in India, Make for the World’, supporting enterprises in enhancing quality, capacity, and global competitiveness.
How This Scheme Will Benefit the Dairy Sector
- Enhancing Processing Capacity
Many dairy MSMEs operate with outdated infrastructure, limiting their ability to scale production efficiently. With access to loans of up to Rs 100 crore under this scheme, dairy businesses can invest in modern processing plants, automated packaging lines, and improved storage solutions, ensuring higher productivity and reduced wastage.
- Strengthening the Dairy Supply Chain
India’s dairy sector faces challenges in cold storage, logistics, and efficient milk collection systems. With guaranteed financing, MSMEs can set up advanced refrigeration units, improve milk transportation networks, and enhance cold chain infrastructure, reducing post-harvest losses and ensuring higher-quality dairy products.
- Boosting Value-Added Dairy Product Manufacturing
Consumer demand for premium dairy products such as cheese, yogurt, flavored milk, and protein-based dairy items is rising. This scheme allows MSMEs to invest in specialized machinery and technology, enabling them to diversify product offerings, increase profitability, and expand into export markets.
- Facilitating Global Market Access
With 60% credit coverage and improved financial stability, dairy businesses can enhance their production standards to meet global export requirements. This will allow them to integrate into international dairy value chains, boosting India’s dairy exports to key markets such as the Middle East, Southeast Asia, and Africa.
- Empowering Small Dairy Farmers and Cooperatives
Many small dairy farmers rely on local cooperatives and processing units for market access. With increased credit availability, MSME-led dairy enterprises can expand their procurement networks, offer better prices to farmers, and provide access to high-quality feed and veterinary support.
Industry Leaders Welcome the Initiative
Accelerating Growth and Competitiveness
Ajay Sahai, Director General of the Federation of Indian Export Organisations (FIEO), highlighted that this scheme will help dairy MSMEs invest in modern technology, increase production efficiency, and expand their global reach.
Sanjay Budhia, Chairman of the CII National Committee on EXIM, added that expanded credit availability will allow dairy businesses to become more competitive in international markets, contributing to India’s export growth.
Encouraging Investments in Dairy Component Manufacturing
Deep Kapuria, Chairman of Hi-Tech Gears, noted that the scheme would particularly benefit dairy equipment manufacturers, allowing India to reduce dependency on imports and strengthen its local dairy processing ecosystem.
Increasing Dairy’s Contribution to GDP and Employment
With the manufacturing sector contributing 17% to India’s GDP and employing over 27.3 million workers, this scheme is expected to create jobs, boost rural entrepreneurship, and strengthen the dairy sector’s economic impact.
A Transformational Opportunity for Dairy Entrepreneurs
The Mutual Credit Guarantee Scheme for MSMEs is a game changer for India’s dairy industry. By easing access to credit, it will enable MSMEs to modernize operations, enhance production capacity, strengthen supply chains, and boost exports.
With India being the world’s largest producer of milk, such financial support is crucial to maintaining its global leadership in dairy while ensuring sustainable growth for farmers, processors, and exporters.
Would you like assistance in applying for this scheme or exploring investment opportunities in dairy? Let’s discuss how you can make the most of this initiative!
Source: Boosting Dairy Industry Growth: How the New MSME Credit Guarantee Scheme Will Help – Jordbrukare
