Context: The Union Budget 2025-26 has introduced a series of measures to strengthen the Micro, Small, and Medium Enterprises (MSME) sector.
Relevance of the Topic:Prelims: Definition of micro, small, and medium enterprises (MSMEs); New initiatives for MSMEs.
Current Landscape of MSMEs in India:
- The share of MSMEs in India’s Gross Value Added (GVA) is 30.1% in 2022-23.
- In 2023-24, MSME-related products accounted for 45.73% of India’s total exports.
- Currently, over 5.93 crore registered MSMEs employ more than 25 crore people in India.
Major Initiatives in Budget for MSME sector:
1. New Definition of MSMEs:
- The investment and turnover limits for MSME classification will be increased to 2.5 times and 2 times, respectively.
- This will help MSMEs to scale operations and to access better resources. It is expected to improve efficiency, technological adoption, and employment generation.
| MSMEs Revised Definition | ||||
| Investment (not exceeding)(in Rupees crores) | Turnover (not exceeding)(in Rupees crores) | |||
| Current | Revised | Current | Revised | |
| Micro Enterprises | 1 | 2.5 | 5 | 10 |
| Small Enterprises | 10 | 25 | 50 | 100 |
| Medium Enterprises | 50 | 125 | 250 | 500 |
2. Enhanced Credit Availability:
- Credit guarantee cover for micro and small enterprises is increased from ₹5 crore to ₹10 crore.
- Credit guarantee cover of startups will double from ₹10 crore to ₹20 crore, with a reduced fee of 1% for loans in 27 priority sectors.
- Exporter MSMEs will benefit from term loans up to ₹20 crore with enhanced guarantee cover.
3. Credit Cards for Micro Enterprises:
- New customised Credit Card scheme for micro enterprises registered on Udyam portal.
- It will provide ₹5 lakh in credit, with 10 lakh cards set to be issued in the first year.
4. Support for Startups and First-Time Entrepreneurs:
- New Fund of Funds with ₹10,000 crore corpus to be established to support startups.
- A scheme to provide term loans up to ₹2 crore, over five years, to 5 lakh first-time entrepreneurs (women, Scheduled Caste, and Scheduled Tribe).
5. Focus on Labour-Intensive Sectors:
- Product Scheme for footwear and leather sector to support design, component manufacturing, and non-leather footwear production. It is expected to create 22 lakh jobs and generate a turnover of ₹4 lakh crore.
- New scheme for the toy sector to promote cluster development, skill-building and to position India as a global toy manufacturing hub.
- National Institute of Food Technology, Entrepreneurship and Management to be established in Bihar, to boost food processing industries in the eastern region.
6. Manufacturing and Clean Tech Initiatives:
- The National Manufacturing Mission to provide policy support and roadmaps for small, medium, and large industries, under Make in India initiative.
- Special emphasis will be given to clean tech manufacturing, fostering domestic production of solar PV cells, EV batteries, wind turbines, and high-voltage transmission equipment.