NEW DELHI, Feb 5: The Union Budget for 2025-26 has unveiled a series of transformative measures aimed at boosting the Micro, Small, and Medium Enterprises (MSME) sector, recognizing its crucial role in India’s economic growth. As announced in a press release from the Ministry of Micro, Small & Medium Enterprises, MSMEs represent a vibrant force in the Indian economy with 5.93 crore registered businesses, employing over 25 crore people. The sector plays a significant role in manufacturing, exports, and job creation. In fact, products related to MSMEs accounted for 45.73% of India’s total exports in 2023-24, highlighting its growing importance in making India a global manufacturing hub.
A key highlight of this year’s budget is the substantial increase in the credit guarantee cover for micro and small enterprises. The cover has been enhanced from Rs. 5 crore to Rs. 10 crore, a move expected to generate an additional Rs. 1.5 lakh crore in credit over the next five years. This expansion will improve access to credit for MSMEs, enabling them to grow, innovate, and adopt new technologies. In another significant step, the budget has doubled the credit guarantee for startups from Rs. 10 crore to Rs. 20 crore. Additionally, loans in 27 priority sectors will now be offered at a reduced fee of 1%, further incentivizing entrepreneurship and growth.
Export-oriented MSMEs will also benefit from an improved access to finance, with the provision of term loans of up to Rs. 20 crore. These measures are expected to support the growth of these businesses in global markets, enhancing India’s position as a leading player in international trade.
In addition to the credit facilities, the budget also introduces a new Rs. 10,000 crore Fund of Funds aimed at supporting startups across the country. The Fund will provide loans for 5 lakh first-time entrepreneurs, particularly from disadvantaged backgrounds, including women, Scheduled Castes, and Scheduled Tribes. These entrepreneurs will have access to loans of up to Rs. 2 crore over the next five years, providing a significant boost to the entrepreneurial ecosystem.
Sector-specific initiatives are also set to enhance productivity in labour-intensive industries. For example, the footwear and leather sector is expected to create 22 lakh new jobs and achieve a turnover of Rs. 4 lakh crore through the Focus Product Scheme. Meanwhile, a new scheme targeting the toy manufacturing sector aims to position India as a global hub for toy production.
These measures reflect the government’s commitment to empowering MSMEs and ensuring their continued contribution to India’s economic growth. With increased financial support, new funding initiatives, and sector-specific policies, the Union Budget 2025-26 is poised to propel MSMEs to new heights, supporting their role in driving innovation, job creation, and exports.
