New Measures to Boost MSME Sector announced in Union Budget 2025-26

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).

Key Highlights About the Reforms

• 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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• 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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