India’s electronics and semiconductor MSMEs are set to receive fresh liquidity support after the Union Cabinet approved the Emergency Credit Line Guarantee Scheme 5.0, a move welcomed by the India Electronics and Semiconductor Association.
The scheme provides 100 percent credit guarantee support for MSMEs, zero guarantee fee, and additional working capital access. IESA said the approval comes at a time when businesses are managing global supply chain pressures and geopolitical disruptions.
MSMEs form a major part of India’s electronics manufacturing ecosystem, contributing across component manufacturing, electronics manufacturing services, repair and refurbishment, semiconductor supply chains, tooling, materials, and design led innovation. According to IESA, almost 75 percent of applications for the recent Electronics Component Manufacturing Scheme came from the MSME sector.
Ashok Chandak, President of IESA, said MSMEs contribute nearly 30 percent to India’s GDP, around 35 percent of manufacturing output, more than 45 percent of exports, and employ over 32 crore people across the country. He added that MSMEs also make up a large share of electronics industry units and remain central to localisation, employment generation, and supply chain resilience.
“IESA thanks the Government of India for the timely approval of ECLGS 5.0. MSMEs are the backbone of India’s electronics and semiconductor ecosystem, supporting the sector across manufacturing, components, semiconductor supply chains, repair economy, materials, and design services. This collateral-free and fully guaranteed credit support will help MSMEs maintain operations, protect jobs, strengthen supply chain resilience, and continue investments in growth and technology upgradation,” said Ashok Chandak, President of IESA.
For electronics and semiconductor businesses, where inventory cycles, working capital, and supply chain continuity remain critical, IESA said ECLGS 5.0 will act as a major confidence booster. The association added that the scheme can help Tier 2 and Tier 3 suppliers integrate faster into global value chains, support localisation, and contribute to India’s target of building a 500 billion dollar electronics manufacturing ecosystem.
IESA also noted that ECLGS 5.0 complements ongoing initiatives such as the India Semiconductor Mission, Electronics Component Manufacturing Scheme, Production Linked Incentive schemes, and broader Make in India efforts by improving credit access for smaller enterprises.
The association said the Union Budget 2026 to 2027 proposed a three part approach to help Indian MSMEs grow through equity, liquidity, and professional support. It added that the one year moratorium and extended loan tenure under the scheme will support MSMEs in expanding capacity, improving competitiveness, and increasing domestic value addition.
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