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In a significant move to strengthen the (MSME) sector, the Union Finance Minister, in the 2025 Budget, announced a series of measures aimed at improving financial accessibility and growth for MSMEs across the country. One of the key highlights of the Budget is the increase in the investment and turnover limits for MSMEs. The investment limit will be raised by 2.
5 times, while the turnover limit will be increased twofold. This initiative is designed to help MSMEs scale their operations, adopt advanced technologies, and improve their capital access. The Finance Minister also introduced a revolutionary financial tool for micro-enterprises, with the launch of customised credit cards.
These cards will be available to businesses registered on the Udyam portal, with a Rs 5 lakh limit. In the first year alone, the government plans to issue 10 million such credit cards, offering greater financial flexibility to small-scale entrepreneurs. As per the Finance Minister, “For micro-enterprises, we will introduce customised credit cards with a Rs 5 lakh limit for businesses registered on the Udyam portal.
" In addition to this, the government has enhanced the credit guarantee cover for micro and small enterprises. The cover will now rise from Rs 5 crore to Rs 10 crore, thereby providing an additional Rs 1.5 lakh crore in credit over the next five years.
This measure aims to help small businesses expand their operations without worrying about financial constraints. Startups will also benefit from the budget, as the credit guarantee cover for them has been increased from Rs 10 crore to Rs 20 crore. Additionally, the guarantee fee for loans in 27 sectors critical to the initiative will be reduced to just 1 per cent, making credit more accessible to emerging businesses.
Moreover, well-performing exporter MSMEs will now be eligible for term loans of up to Rs 20 crore. These measures are expected to strengthen India's position in global markets and create new employment opportunities within the sector. The Finance Minister also announced a new Fund of Funds to further support startups.
This builds upon the existing Alternate Investment Fund (AIF) for startups, which has already received commitments of over Rs 91,000 crore, backed by the government’s Rs 10,000 crore contribution. A fresh Rs 10,000 crore will now be added under the new Fund of Funds, aimed at encouraging further innovation and entrepreneurship. The MSME sector, which accounts for 36 per cent of India's manufacturing output and contributes 45 per cent to the country’s total exports, is a backbone of the Indian economy.
With 5.7 crore MSMEs currently operational, the sector employs 7.5 crore people and is expected to play a crucial role in India’s economic growth.
According to ANI reports, these comprehensive measures will provide MSMEs with the confidence and support they need to expand, enhance efficiency, and contribute to job creation across the country..
