A series of measures has been announced in the Union Budget 2025 which are aimed at strengthening India’s Micro, Small, and Medium Enterprises (MSME).
- The Classification Criteria for MSMEs been Revised:
- The investment and turnover limits for classification of all MSMEs will be enhanced to 2.5 and 2 times respectively, to help MSMEs achieve higher efficiencies of scale, technological upgradation and better access to capital.
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| Rs. in Crore |
Rs. in Crore |
Turnover |
|
Current |
Revised |
Current |
Revised |
| Micro Enterprises |
1 |
2.5 |
5 |
10 |
| Small Enterprises |
10 |
25 |
50 |
100 |
| Medium Enterprises |
50 |
125 |
250 |
500 |
- Enhancement of Credit Availability with Guarantee Cover:
- The credit guarantee cover will increase to improve access to credit,
- MSME: It will increase from 5 crore to 10 crore, leading to additional credit of 1.5 lakh crore in the next 5 years
- Startups: It will increase from 10 crore to 20 crore,
- The guarantee fee is being moderated to 1 per cent for loans in 27 focus sectors important for Atmanirbhar Bharat.
- Exporter MSMEs: It will increase for term loans up to 20 crore.
- Credit Cards for Micro Enterprises:
- Customized Credit Cards with a 5 lakh limit for micro enterprises registered on Udyam portal will be introduced.
- In the first year, 10 lakh such cards will be issued.
- Fund of Funds for Startups:
- A new Fund of Funds, with expanded scope and a fresh contribution of another 10,000 crore will be set up.
- Example: The Alternate Investment Funds (AIFs) for startups, supported by the Fund of Funds set up with the government contribution of 10,000 crore have received commitments of more than 91,000 crore.
- Deep Tech Fund of Funds: A Deep Tech Fund of Funds will also be explored to catalyze the next generation startups as a part of this initiative.
- Empowering Entrepreneurs:
- A new scheme will be launched for 5 lakh women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs to provide term loans up to 2 crore during the next 5 years.
- Export Promotion Mission:
- An Export Promotion Mission, with sectoral and ministerial targets, driven jointly by the Ministries of Commerce, MSME, and Finance will be set up
- The Mission will facilitate easy access to export credit, cross-border factoring support, and support to MSMEs to tackle non-tariff measures in overseas markets.
- Focus Sectors: Targeted policy measures will be implemented in two focus industries to promote employment and entrepreneurship
- Focus Product Scheme for Footwear & Leather Sectors: The scheme will enhance productivity, quality and competitiveness by supporting design capacity, component manufacturing and production machinery for both leather and non-leather footwear.
- Aim: To generate employment for 2.2 million people, Rs 4 lakh crore in turnover and Rs 1.1 lakh crore in exports.
- Toy Sector Development: The government plans a dedicated scheme to develop clusters, strengthen skills, and foster an ecosystem for sustainable, innovative, and high-quality toy manufacturing under the ‘Made in India’ brand, building on the National Action Plan for Toys.
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MSME Sector in India
- The MSME sector’s share of India’s GDP was 30.1% in 2022-23.
- India has over 10 million registered MSMEs employing approximately 75 million people.
- MSME Sector contributes 36 per cent to the country’s manufacturing output and account for 45 per cent of India’s exports.
- Budget 2025-2026:
- MSME Sector has been regarded as the 2nd Engine of Development.
- The Union Ministry of Micro, Small, and Medium Enterprises has been allocated Rs 23,168 crore (an increase of 4.6 per cent over the 2024-25).
- Allocation for Key Scheme:
- Khadi, Village and Coir Industries: Allocation increased by 9 per cent to Rs 1,532 crore
- Technology Upgradation and Quality Certification: Funding remains unchanged at Rs 74.42 crore
- Prime Minister Employment Generation Programme (PMEGP) and Other Credit Support Schemes: Allocation reduced by 1.5 per cent to Rs 11,954.42 crore
- Significance of MSMEs Sector in India’s Growth Trajectory:
- Export Powerhouse: Exports from MSMEs increased to ₹12.39 lakh crore in 2024-25 contributing 45.73%, boosting India’s economy and strengthening global trade.
- The total number of exporting MSMEs has also increased considerably from 52,849 in 2020-21 to 1,73,350 in 2024-25
- GDP GRowth: The Gross Value Added (GVA) by MSMEs in India’s GDP rose to 30.1% in 2022-23 from 29.7% in 2017-18
- Employment Generation: The micro, small, and medium enterprises (MSMEs) in India employed over 20 crore people as of July 2024 marking a 66% increase from the previous year.
- Women Empowerment: 20.5% of the MSMEs registered on the Udyam Registration Portal are led by women, accounting for 18.73% of the total employment generated by Udyam-registered MSMEs.
- 4.54 crore employed by MSMEs are women.
- Entrepreneurship : MSMEs has promoted an entrepreneurial culture in the nation with innovation and cost effective business its main model.
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February 4, 2025
