The Union Budget 2025-26 introduces a series of measures aimed at strengthening the Micro, Small, and Medium Enterprises (MSME) sector, recognising its role as one of the key engines in India’s journey of development, alongside agriculture, investment, and exports. To help businesses expand and improve efficiency, the investment and turnover limits for MSME classification have been raised. Access to credit is set to improve with an increase in the credit guarantee cover for micro and small enterprises, startups, and export-focused MSMEs. A new scheme will provide financial support to first-time entrepreneurs from disadvantaged backgrounds, while sector-specific initiatives will enhance productivity in areas such as footwear, leather, and toy manufacturing.
As a vital contributor to India’s industrial landscape, the MSME sector plays a crucial role in manufacturing, exports, and employment. With 5.93 crore registered MSMEs employing more than 25 crore people, these enterprises generate a significant share of the country’s economic output. In 2023-24, MSME-related products accounted for 45.73% of India’s total exports, reinforcing their role in positioning the country as a global manufacturing hub. The new budgetary provisions aim to build on this strong foundation by fostering innovation, enhancing competitiveness, and ensuring better access to resources. Through these steps, the government seeks to equip MSMEs with the tools needed to expand their reach and strengthen their contribution to India’s economic growth.
Key Measures for MSMEs in Union Budget 2025-26
The Union Budget 2025-26 introduces a series of measures aimed at strengthening the MSME sector by enhancing credit access, supporting first-time entrepreneurs, and promoting labour-intensive industries.
Revised Classification Criteria
To help MSMEs scale operations and access better resources, the investment and turnover limits for classification have been increased by 2.5 times and 2 times, respectively. This is expected to improve efficiency, technological adoption, and employment generation.
Enhanced Credit Availability
The credit guarantee cover for micro and small enterprises has been increased from ₹5 crore to ₹10 crore, enabling additional credit of ₹1.5 lakh crore over five years.
Startups will see their guarantee cover double from ₹10 crore to ₹20 crore, with a reduced fee of 1% for loans in 27 priority sectors.
Exporter MSMEs will benefit from term loans up to ₹20 crore with enhanced guarantee cover.
Credit Cards for Micro Enterprises
A new customised Credit Card scheme will provide ₹5 lakh in credit to micro enterprises registered on the Udyam portal, with 10 lakh cards set to be issued in the first year.
Support for Startups and First-Time Entrepreneurs
A new Fund of Funds with ₹10,000 crore will be established to expand support for startups.
A scheme for 5 lakh first-time women, Scheduled Caste, and Scheduled Tribe entrepreneurs will provide term loans up to ₹2 crore over five years, incorporating lessons from the Stand-Up India scheme.
Focus on Labour-Intensive Sectors
A Focus Product Scheme for the footwear and leather sector will support design, component manufacturing, and non-leather footwear production, expected to create 22 lakh jobs and generate a turnover of ₹4 lakh crore.
A new scheme for the toy sector will promote cluster development and skill-building, positioning India as a global toy manufacturing hub.
A National Institute of Food Technology, Entrepreneurship and Management will be established in Bihar to boost food processing industries in the eastern region.
Manufacturing and Clean Tech Initiatives
A National Manufacturing Mission will provide policy support and roadmaps f or small, medium, and large industries under the Make in India initiative.
Special emphasis will be given to clean tech manufacturing, fostering domestic production of solar PV cells, EV batteries, wind turbines, and high-voltage transmission equipment.
Conclusion
In conclusion, the Union Budget 2025-26 outlines a strategic approach to bolster the MSME sector in India, emphasizing increased credit access, entrepreneurial support, and sector-specific initiatives. The significant revisions in classification criteria, coupled with enhanced credit guarantees and customised financial products like credit cards for micro-enterprises, are poised to catalyze growth and innovation. The focus on sectors like footwear, leather, and toys not only aims to boost employment but also positions India as a competitive player in global markets. Furthermore, the government’s ongoing initiatives like Udyam Registration, PM Vishwakarma, PMEGP, SFURTI, and the Public Procurement Policy continue to demonstrate a committed effort towards integrating and empowering MSMEs. These measures, combined with the establishment of new institutions and missions for manufacturing and clean technology, reflect a holistic strategy to not only sustain but significantly amplify the role of MSMEs in driving economic growth, employment, and inclusive development in India.
At Consultup India, we’re committed to helping MSMEs navigate the evolving business landscape with expert advisory, compliance support, and funding facilitation. Whether you’re a budding entrepreneur seeking credit or an established enterprise exploring expansion under the new Union Budget 2025-26 provisions, our team is here to guide you every step of the way. Get in touch with us today to unlock the full potential of government schemes, scale your business, and drive sustainable growth.
