The Union Budget 2025-26 emphasizes strengthening the Micro, Small, and Medium Enterprises (MSME) sector, recognizing its vital role as the second engine of economic growth. Several key initiatives have been announced to address the challenges faced by MSMEs and unleash their full potential. Here’s a breakdown of the key highlights:
Revised MSME Classification
The government has proposed significant changes to the classification criteria for MSMEs. Recognizing the need for businesses to expand while keeping their benefits, the thresholds for investment and turnover will be raised. The new limits will be 2.5 times and 2 times higher than the current thresholds, allowing more businesses to be classified as MSMEs and access the related benefits.
Credit Boost for Micro Enterprises
Access to finance remains a crucial challenge for micro-enterprises. To address this, the budget introduces customized Credit Cards specifically for micro-enterprises registered on the Udyam portal. These cards will offer a credit limit of ₹5 lakh, and the government aims to issue 10 lakh such cards in the first year itself, significantly improving access to working capital.
Fueling Innovation with the Fund of Funds for Startups:
Recognizing the vital role of startups in driving innovation and creating employment, the government has announced a new Fund of Funds.With an expanded scope and a fresh contribution of ₹10,000 crore, this fund will provide much-needed capital to promising startups, nurturing their growth and scaling their operations
Empowering First-Time Entrepreneurs
The budget also focuses on inclusive growth by announcing a new scheme for first-time entrepreneurs. This scheme targets 5 lakh women, Scheduled Castes, and Scheduled Tribes, providing them with term loans of up to ₹2 crore over the next 5 years. This initiative aims to encourage entrepreneurship among underrepresented groups and promote economic empowerment.
Focus on Key Sectors
Focus Product Scheme for Footwear & Leather Sectors: A dedicated scheme has been announced to improve productivity, quality, and competitiveness in India’s footwear and leather sector. This initiative is expected to create employment for 22 lakh persons, generate a turnover of ₹4 lakh crore, and boost exports by over ₹1.1 lakh crore.
Measures for the Toy Sector: A scheme to develop high-quality, unique, innovative, and sustainable toys has been announced, aiming to position India as a global toy hub.
Support for Food Processing: To further boost the food processing sector, a National Institute of Food Technology, Entrepreneurship and Management will be established in Bihar.
Manufacturing Mission: “Make in India”
The “Make in India” initiative receives further impetus with the announcement of a National Manufacturing Mission. This mission will cover small, medium, and large industries, aiming to enhance India’s manufacturing capabilities and promote domestic production.
Conclusion
The Union Budget 2025-26 demonstrates a strong commitment to the growth and development of MSMEs.The measures outlined above, including revised classification criteria, enhanced access to credit, support for startups and first-time entrepreneurs, and focus on specific sectors, are expected to create a more favorable environment for MSMEs to thrive. These initiatives are crucial for driving economic growth, generating employment, and achieving inclusive development in India.
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