The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, introduces significant measures to bolster Micro, Small, and Medium Enterprises (MSMEs), recognizing them as a pivotal engine of economic growth. Currently, over 1 crore registered MSMEs employ 7.5 crore individuals and contribute to 36% of India’s manufacturing output, accounting for 45% of exports. To enhance their efficiency, technological advancement, and access to capital, the government has revised the classification criteria for MSMEs. The investment and turnover limits have been increased to 2.5 and 2 times, respectively, providing these enterprises with greater confidence to expand and generate employment opportunities for the youth.
- Micro and Small Enterprises: The guarantee cover will be increased from ₹5 crore to ₹10 crore, facilitating additional credit of ₹1.5 lakh crore over the next five years.
- Startups: The cover will be raised from ₹10 crore to ₹20 crore, with a moderated guarantee fee of 1% for loans in 27 focus sectors vital for the Atmanirbhar Bharat initiative.
- Exporter MSMEs: Well-performing exporter MSMEs will receive term loans up to ₹20 crore.
These measures aim to empower MSMEs to scale operations, upgrade technology, and access necessary capital for growth.
To further support MSMEs in the global market, the government will establish an Export Promotion Mission. This mission, driven jointly by the Ministries of Commerce, MSME, and Finance, will set sectoral and ministerial targets. It will facilitate easy access to export credit, provide cross-border factoring support, and assist MSMEs in navigating non-tariff measures in overseas markets.
The budget also focuses on domestic manufacturing and value addition. Building on previous exemptions, the government proposes to fully exempt basic customs duty on cobalt powder and waste, scrap of lithium-ion batteries, lead, zinc, and 12 other critical minerals. This initiative aims to secure the availability of essential materials for manufacturing in India, promoting job creation and supporting MSMEs in the manufacturing sector.
Additionally, a new scheme targeting 5 lakh first-time entrepreneurs from women, Scheduled Castes, and Scheduled Tribes has been announced. This scheme will provide term loans up to ₹2 crore over the next five years, fostering inclusivity and encouraging entrepreneurship among underrepresented groups.
The budget introduces a Focus Product Scheme for the footwear and leather sectors to enhance productivity, quality, and competitiveness. The scheme will support design capacity, component manufacturing, and machinery required for producing non-leather quality footwear, in addition to support for leather footwear and products. It is expected to facilitate employment for 22 lakh individuals, generate a turnover of ₹4 lakh crore, and achieve exports exceeding ₹1.1 lakh crore.
Collectively, these initiatives underscore the government’s commitment to strengthening the MSME sector, recognizing its critical role in economic development, employment generation, and positioning India as a global manufacturing hub.
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