The Union Budget 2025-26 has introduced a set of comprehensive measures to boost the Micro, Small, and Medium Enterprises (MSME) sector, recognising its critical role in India’s economic growth as per a press release issued by the Ministry of Micro, Small & Medium Enterprises. With 5.93 crore registered MSMEs employing over 25 crore people, the sector contributes significantly to manufacturing, exports, and job creation. In 2023-24 alone, MSME-related products accounted for 45.73% of India’s total exports, underlining the sector’s contribution to positioning the country as a global manufacturing hub.
A major highlight of this year’s budget is the increase in the credit guarantee cover for micro and small enterprises. The cover has been raised from Rs.5 crore to Rs.10 crore, enabling an additional Rs.1.5 lakh crore in credit over the next five years. This move is expected to enhance the credit access for MSMEs, fostering their expansion and promoting technological adoption. The budget has also doubled the credit guarantee for startups from Rs.10 crore to Rs.20 crore, with a reduced 1% fee for loans in 27 priority sectors. Export-oriented MSMEs will benefit from term loans up to Rs.20 crore, further facilitating their growth in international markets.
In addition to these financial measures, the budget introduces a new Fund of Funds worth Rs.10,000 crore aimed at supporting startups. This initiative will also include a loan scheme for 5 lakh first-time entrepreneurs from disadvantaged backgrounds, including women, Scheduled Castes, and Scheduled Tribes. These entrepreneurs will receive loans of up to Rs.2 crore over the next five years.
Sector-specific initiatives have also been introduced to enhance productivity in labour-intensive industries. The footwear and leather sector is expected to generate 22 lakh new jobs and achieve a turnover of Rs.4 lakh crore through the Focus Product Scheme. Similarly, a new scheme for the toy manufacturing sector aims to position India as a global hub.
Through these measures, the government aims to provide MSMEs with the resources they need to expand, innovate, and strengthen their contribution to India’s economic growth in the coming years.
