Big promises for micro, small and medium enterprises in Budget 2025-26

Micro, Small, and Medium Enterprises — one of the four “powerful engines” of India's economy — got a major boost in Union Budget 2025. Union Finance Minister Nirmala Sitharaman announced reforms aimed at expanding credit access, boosting investment and supporting entrepreneurs.

India’s MSMEs employ 75 million people and contribute 36 per cent to manufacturing output. The Budget increases investment and turnover limits, unlocking more working capital. It has also doubled the Credit guarantee coverage — Rs 10 crore for MSMEs, Rs 20 crore for start-ups.

Exporter MSMEs can now access enhanced credit for global trade. Other New initiatives include a Rs 10,000 crore Fund of Funds for start-ups and a scheme for first-time entrepreneurs from women, SCs and STs. The Budget also targets the footwear and toy industries, aiming to create millions of jobs under 'Made in India'.

The MSME Ministry gets Rs 23,168 crore, a 4.6 per cent hike, for Union budget allocation in 2024-25. The allocation increase though should be seen with caution as the revised estimate for 2024-25 was reduced by 22 per cent from what was originally allocated in the Union Budget. Will these measures be enough to power MSMEs forward? Time will tell!