In the Union Budget 2025-26, Finance Minister Nirmala Sitharaman unveiled several measures aimed at strengthening over 1 crore registered micro, small, and medium enterprises (MSMEs) in India.
MSMEs play a significant role in the economy, employing 7.5 crore people and contributing 36% to the country's manufacturing, as well as 45% to exports, according to Sitharaman.
To further empower these businesses, she announced enhancements to their investment and turnover limits, increasing them by 2.5 and 2 times, respectively, helping MSMEs scale up operations, adopt technology, and gain better access to capital.
Key initiatives for MSMEs include:
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Credit Guarantee Scheme: The credit guarantee cover for micro and small enterprises will rise from Rs 5 crore to Rs 10 crore, providing an additional Rs 1.5 lakh crore in credit over the next five years. For startups, the cover will increase from Rs 10 crore to Rs 20 crore, with a rationalized guarantee fee of 1% for loans in 27 focus sectors vital to Atmanirbhar Bharat.
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Personalized Credit Cards: MSMEs registered on the Udyam portal will be issued personalized credit cards with a limit of Rs 5 lakh. The government plans to issue 10 lakh such cards in the first year.
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New Fund of Funds: The existing Fund of Funds, designed to support startups, has received commitments exceeding Rs 91,000 crore, and an additional Rs 10,000 crore will be contributed to establish a new Fund of Funds to further promote entrepreneurship.
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Support for First-Time Entrepreneurs: A new scheme will provide term loans of up to Rs 2 crore to 5 lakh first-time entrepreneurs, focusing on women, SCs/STs, with online capacity building initiatives for entrepreneurship and managerial skills.
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Targeted Measures for Labour-Intensive Sectors: The government will also focus on specific policies to promote employment and entrepreneurship in labour-intensive sectors.
With 1.59 lakh startups now recognized by the Department for Promotion of Industry and Internal Trade (DPIIT), India has firmly established itself as the third-largest startup ecosystem globally, a trend that will likely be further supported by these initiatives.
These measures are expected to enhance the MSME sector's competitiveness, support innovation, and drive employment, especially in the rural and underserved areas, thus contributing significantly to the country's economic growth.
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