Budget 2025: Finance Minister Sitharaman announces support measures for MSMEs

In a significant move to bolster the Micro, Small, and Medium Enterprises (MSME) sector, Finance Minister Nirmala Sitharaman, during the Union Budget 2025 presentation, announced an increase in the investment and turnover limits for MSMEs.

Recognizing the specific financial needs of micro-enterprises, she introduced customized credit cards with a limit of Rs 5 lakh for businesses registered on the Udyam portal.

Sitharaman stated, "For the micro-enterprises, we will introduce customized credit cards with a 5 lac rupee limit for micro-enterprises registered on Udhyam portal." These cards aim to provide financial support to small-scale entrepreneurs, and the government plans to issue 10 lakh such cards in the first year.

To further simplify access to credit, the government has also enhanced the credit guarantee cover for micro and small enterprises, increasing it from Rs 5 crore to Rs 10 crore. This will provide an additional Rs 1.5 lakh crore in credit over the next five years, allowing small businesses to scale up operations.

Sitharaman emphasized, "To help them achieve higher efficiencies of scale, technological upgradation, and better access to capital, the investment and turnover limits for classification of all MSMEs will be enhanced to 2.5 and 2 times respectively."

These changes are expected to provide MSMEs with the confidence they need to grow, adopt advanced technology, and improve access to capital. In addition, the startup sector will benefit from an increased credit guarantee cover from Rs 10 crore to Rs 20 crore.

The government also plans to reduce the guarantee fee for loans in 27 key sectors essential to the Aatmanirbhar Bharat initiative to 1 percent. Furthermore, well-performing exporter MSMEs will now have access to term loans of up to Rs 20 crore, strengthening India's global market position.

Sitharaman further stated, "Also for the micro-enterprises, we will introduce customized credit cards with a 5 lac rupee limit for micro-enterprises registered on Udhyam portal. In the first year, 10 lakh such cards will be issued."

Additionally, the government will establish a new Fund of Funds to support startups, building on the success of the existing Alternate Investment Fund (AIF), which has already received over Rs 91,000 crore in commitments with the government’s contribution of Rs 10,000 crore.

The new Fund of Funds will have a fresh contribution of Rs 10,000 crore to further encourage innovation and entrepreneurship.

With 5.7 crore MSMEs operating across manufacturing and services, the sector remains pivotal to India's economy.

Over 1 crore registered MSMEs currently employ 7.5 crore people, contributing 36 percent of the country's manufacturing output and 45 percent of India’s total exports.