Ministry of Micro, Small & Medium Enterprises
Azadi Ka Amrit Mahotsav
Budget 2025-26: Fuelling MSME Expansion
Posted On: 04 FEB 2025 5:27 PM by PIB Delhi
Introduction
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 INR5 crore to INR10
crore, enabling additional credit of INR1.5 lakh crore over five years.
- Startups will see their guarantee cover double from INR10 crore to INR20 crore, with a reduced fee of 1%
for loans in 27 priority sectors.
- Exporter MSMEs will benefit from term loans up to INR20 crore with enhanced guarantee cover.
Credit Cards for Micro Enterprises
A new customised Credit Card scheme will provide INR5 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 INR10,000 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 INR2 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 INR4 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 for 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.
