Union Finance Minister Nirmala Sitharaman announced significant measures on Saturday to bolster over 10 million registered micro, small, and medium enterprises (MSMEs), which employ 75 million people and generate 36% of the country’s manufacturing output.
These MSMEs, known for their quality products, are responsible for 45% of India’s exports, the Finance Minister stated while presenting the Budget 2025-26.
To help MSMEs achieve higher efficiencies of scale, technological upgrades, 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. “This will give them the confidence to grow and generate employment for our youth,” said the Finance Minister.
To improve access to credit, the credit guarantee cover will be enhanced. For micro and small enterprises, it will be increased from $500,000 to $1 million, leading to additional credit of $15 billion in the next five years. For startups, the credit guarantee cover will be increased from $1 million to $2 million, with the guarantee fee moderated to 1% for loans in 27 focus sectors important for Atmanirbhar Bharat. For well-run exporter MSMEs, credit availability with guarantee cover will be for term loans up to $2 million.
“We will introduce customized credit cards with a $50,000 limit for micro-enterprises registered on the Udyam portal. In the first year, 1 million such cards will be issued,” she said.
The Alternate Investment Funds (AIFs) for startups have received commitments of more than $9.1 billion, supported by the Fund of Funds, set up with a government contribution of $1 billion. Now, a new Fund of Funds, with an expanded scope and a fresh contribution of another $1 billion, will be established.
A new scheme will be launched for 500,000 women, Scheduled Castes, and Scheduled Tribes first-time entrepreneurs, providing term loans up to $200,000 over the next five years. The scheme will incorporate lessons from the successful Stand-Up India scheme. Online capacity building for entrepreneurship and managerial skills will also be organized, the Finance Minister said.
To promote employment and entrepreneurship opportunities in labor-intensive sectors, “our government will undertake specific policy and facilitation measures,” FM Sitharaman added.
With more than 159,000 startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) as of January 15, India has firmly established itself as the third-largest startup ecosystem in the world.
