Govt Mulls Credit Guarantee, Interest Subsidy On Loans For Electronic Manufacturers

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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. 

In a recent report PTI stated that 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. According to the proposal, the government will provide up to 50 per cent guarantee cover of the sanctioned loan amount, a person aware of the development informed PTI.

Revised scheme
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. 

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Electronics Industry has been seeking that it should be able to get term loans on par with internationally acceptable rates. Currently, the industry pays around 11-12 per cent interest on the term loans availed in India, which are available at around 5-7 per cent in other countries. The industry has been demanding an interest subvention of 4-6 per cent from the government on the term loans. 

The scheme under consideration proposes to cover term loans for plant & machinery up to Rs 1,000 crore per borrowing unit with a tenure of up to 10 years, to set up new electronics manufacturing plant or for funding expansion of an existing electronics manufacturing unit. 

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