In a landmark initiative to boost Micro, Small, and Medium Enterprises (MSMEs), Finance Minister Nirmala Sitharaman unveiled a series of measures during her Union Budget 2025-26 speech. Acknowledging the pivotal role of MSMEs in driving economic growth and generating employment, the budget prioritises enhanced credit access, encourages entrepreneurship, and supports women and marginalised communities.
Enhanced Credit Guarantee Cover for MSMEs
A significant highlight of the budget is the enhanced Credit Guarantee Cover under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which has been increased to ₹5 lakh crore, up from ₹2 lakh crore. This enhancement is anticipated to offer essential financial support to over 1.5 crore MSMEs, facilitating access to loans at lower interest rates and with less stringent collateral requirements. Such support is particularly crucial for businesses recovering from the pandemic’s economic fallout.
Special Scheme for Women Entrepreneurs
The budget also introduced a special scheme targeting women entrepreneurs, aiming to foster gender equality within the MSME sector. Women-led enterprises will benefit from:
- Priority access to credit with lower interest rates and relaxed eligibility criteria.
- Subsidies and grants to assist in establishing and expanding their businesses.
- Skill development programmes focusing on business management, digital literacy, and technical skills.
This initiative is expected to empower over 10 lakh women entrepreneurs, promoting innovation and economic self-sufficiency.
Support for SC/ST Entrepreneurs
To enhance inclusivity, the budget announced a dedicated scheme for SC/ST entrepreneurs, offering:
- Interest-free loans for new business ventures or expansion of existing ones.
- Mentorship programmes providing guidance from industry experts.
- Market access initiatives to connect SC/ST-owned businesses with larger markets.
This scheme aims to address economic disparities and create opportunities for marginalised communities.
Increased Credit Limits and Turnover Thresholds
The budget has revised the turnover and credit limits for MSMEs, facilitating easier qualification for government schemes. The new thresholds include:
- Turnover limit raised to ₹250 crore for medium enterprises.
- Credit limit increased to ₹50 crore for working capital and ₹10 crore for term loans.
These adjustments are expected to enable more businesses to access government support and enhance their competitiveness.
Focus on Digital Transformation
To assist MSMEs in adapting to the digital landscape, the budget has allocated funds for:
- Digital infrastructure development, including digital hubs and common facilities.
- E-commerce integration, with training and subsidies for online sales.
- Technology adoption incentives for advanced technologies like AI and IoT.
These initiatives are poised to enhance efficiency, reduce operational costs, and expand market reach for MSMEs.
Skill Development and Entrepreneurship Training
The importance of skill development has been underscored, with the budget announcing:
- Entrepreneurship training programmes for first-time business owners, covering essential skills in business planning, marketing, and financial management.
- Industry-academia collaboration to provide practical training and research opportunities.
Implications for the MSME Sector
The Union Budget 2025-26 is expected to yield transformative effects on the MSME sector. Key benefits anticipated include:
- Improved access to credit, enabling businesses to invest in growth and innovation.
- Increased inclusivity, empowering women and marginalised communities to engage fully in the economy.
- Enhanced competitiveness through digital transformation and skill enhancement.
- Job creation as small businesses, significant employers in India, expand operations.
The Union Budget 2025-26 has sent a powerful message of support for MSMEs, recognising their crucial role as the backbone of the Indian economy. By enhancing credit access, promoting inclusivity, and encouraging innovation, the budget lays a solid foundation for a brighter future for small businesses, driving economic growth and empowering millions of entrepreneurs across the nation.
