Credit surety, interest subsidy for electronic firms on cards

New Delhi, January 14

The government is considering credit guarantee for term loans of up to Rs 100 crore as well as interest subsidy on loans up to Rs 1,000 crore for electronic manufacturing companies under the new policy in works.

According to official sources, the Ministry of Electronics and IT has proposed “credit guarantee fund” (CGF) scheme and “interest subvention scheme” (ISS) to boost electronics manufacturing ecosystem in the country under new National Policy on Electronics in works.

“There is proposal to provide credit guarantee on term loans for projects up to Rs 100 crore per borrowing unit. This will not require any collateral security and third-party guarantee, for setting up a new electronics manufacturing unit or considerable expansion of an existing electronics manufacturing plant. The cover will vary on case-to-case basis, depending upon investments...,” an official source said.

According to the proposal, the government will provide up to 50% guarantee cover of the sanctioned loan amount, the source said.

“It is proposed that Meity shall create a fund with the nodal agency for providing guarantees for the term loans. Meity shall provide funds in advance from its annual budgetary allocation to the nodal agency for utilisation under the scheme,” the source added.

The CGF will be created with a corpus of Rs 1,000 crore to be contributed by the government and a review of the scheme will be undertaken after second year to assess the corpus size in relation to the response from the targeted sector, as per the proposal.

Besides this, the government is formulating interest subvention scheme (ISS) for electronics manufacturers. — PTI

Proposed move 

• There is proposal to provide credit guarantee on term loans for projects up to Rs 100 crore per borrowing unit

• This will not require any collateral security and third-party guarantee for setting up a new electronics manufacturing unit or considerable expansion of an existing plant

• The cover will vary on case-to-case basis, depending upon investments

• The government will provide up to 50% guarantee cover of the sanctioned loan amount

.