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Union Finance Minister Nirmala Sitharaman presented the Union Budget 2025-26 in Parliament. She stated that this budget aims to achieve the goal of ‘Sabka Vikas’ (inclusive development) and assist India in becoming a developed nation. The budget highlights the crucial role of Micro, Small, and Medium Enterprises (MSMEs) in the country’s growth and announces several new initiatives for their development.
Major Steps for MSMEs
To provide MSMEs with better access to technology and capital, the government will increase the investment and turnover limits for MSME classification by 2.5 and 2 times, respectively. This move will help MSMEs grow into larger industries and generate more employment.
Currently, over 1 crore MSMEs in India employ 7.5 crore people and contribute 36% to the country’s manufacturing sector. Additionally, they account for 45% of India’s total exports.
Increase in Credit Guarantee Cover
The government has announced an increase in credit guarantees for MSMEs and startups:
1.For micro and small enterprises: From ₹5 crore to ₹10 crore
2.For startups: From ₹10 crore to ₹20 crore
3.For high-performing MSME exporters: Term loans of up to ₹20 crore
Mukul Goyal, Co-Founder of Stratefix Consulting, stated, “The Union Budget 2025 has rightly highlighted the critical role of MSMEs in India’s economic framework. With over 1 crore registered MSMEs contributing nearly 36% to India’s manufacturing output and 45% to total exports, their importance cannot be overlooked.
The government’s decision to increase the investment and turnover thresholds for MSME classification is commendable. This change will allow more enterprises to avail MSME benefits, fostering growth and competitiveness. Additionally, raising the credit guarantee cover for micro-enterprises from ₹5 crore to ₹10 crore is a crucial step. This initiative is expected to inject an additional ₹1.5 lakh crore in credit over the next five years, empowering small businesses to invest in innovation and expansion.”
However, despite these positive measures, some major challenges faced by MSMEs still need to be addressed. Access to timely and affordable credit remains a significant hurdle for many small businesses. Simplifying the loan disbursement process and reducing bureaucratic delays is crucial to ensuring that government benefits reach the grassroots level.
Furthermore, the emphasis on digitization and technological adoption is a welcome move. Encouraging MSMEs to integrate digital tools can improve operational efficiency and open new market opportunities. Providing incentives for technology adoption and digital literacy programs will play a key role in this transformation.
Credit Cards for Small Enterprises
The government will introduce a credit card with a limit of up to ₹5 lakh for micro-enterprises. In the first year, 10 lakh credit cards will be issued to help small businesses access instant funding.
Launch of the Export Promotion Mission
To boost exports, the government will launch an Export Promotion Mission, jointly managed by the Ministry of Commerce, the Ministry of MSME, and the Ministry of Finance. This initiative will:
Ensure easy access to export credit
Address cross-border factoring issues, resolving payment challenges in international trade Help MSMEs tackle non-tariff barriers in foreign markets
Conclusion
The Budget 2025-26 has introduced several major initiatives for MSMEs and exporters. The government’s goal is to establish India as a global manufacturing and export hub, strengthening the country’s economy and generating new employment opportunities.
