The Union Budget 2025-26 introduces several measures aimed at boosting the MSME sector, which is a critical component of India’s industrial and economic landscape. The budget emphasizes credit access, digitalization, and business-friendly reforms to foster growth, increase employment, and enhance exports.
- Revised Classification Criteria
By increasing the investment and turnover limits for MSME classification, more businesses can qualify as MSMEs. This allows them to access government benefits, easier credit, and tax incentives, which are crucial for growth and efficiency.
Rs. in Crore | Investment | Turnover |
Current | Revised | Current | Revised |
Micro Enterprises | 1 | 2.5 | 5 | 10 |
Small Enterprises | 10 | 25 | 50 | 100 |
Medium Enterprises | 50 | 125 | 250 | 500 |
- Enhanced Credit Availability
- Credit guarantee cover for micro and small enterprises raised from ₹5 crore to ₹10 crore, unlocking an additional ₹1.5 lakh crore in credit over five years.
- Startups now get ₹20 crore in guarantee cover (up from ₹10 crore).
- Exporter MSMEs eligible for term loans up to ₹20 crore with an enhanced guarantee cover.
- New MSME Credit Card Scheme to provide ₹5 lakh in credit to micro enterprises registered on the Udyam portal, with 10 lakh cards to be issued in the first year.
- Support for Startups and First-Time Entrepreneurs
- ₹10,000 crore Fund of Funds to expand support for startups.
- A new scheme for 5 lakh first-time entrepreneurs (women, SC, ST) offering loans up to ₹2 crore over five years.
- Focus on Labour-Intensive Sectors
- Footwear & Leather Industry: New Focus Product Scheme expected to generate 22 lakh jobs and contribute ₹4 lakh crore in turnover.
- Toy Industry: Cluster development and skill-building to position India as a global manufacturing hub.
- Food Processing: A National Institute of Food Technology, Entrepreneurship, and Management to be set up in Bihar.
- Manufacturing & Clean Tech Initiatives
- National Manufacturing Mission to promote Make in India across MSMEs.
- Special push for clean technology, including solar PV cells, EV batteries, wind turbines, and transmission equipment.
Current Landscape of MSMEs in India
Economic Contribution
- 93 crore registered MSMEs employ over 25 crore people.
- MSMEs account for 45.73% of total exports (2023-24).
- Exports from MSMEs surged from ₹3.95 lakh crore (2020-21) to ₹12.39 lakh crore (2024-25).
- Their contribution to Gross Value Added (GVA) increased from 27.3% (2020-21) to 30.1% (2022-23).
MSME Share in India’s Exports (%)
Year | MSME Export Share (%) |
2020-21 | 43.59% |
2022-23 | 45.73% |
2023-24 | 45.79% |
Budgetary Outlay for MSMEs (2019-26)
The MSME budget allocation has seen consistent growth, with ₹23,168.15 crore allocated in 2025-26.
Year | Budget Allocation (₹ Crore) |
2019-20 | 7,011.29 |
2021-22 | 15,699.65 |
2023-24 | 22,137.95 |
2025-26 | 23,168.15 |
Government Initiatives for MSMEs
- Udyam Registration Portal
- Launched in 2020, enabling free, paperless registration for MSMEs.
- As of Feb 2025: 5.93 crore MSMEs registered.
- PM Vishwakarma Scheme
- Launched in 2023 with ₹13,000 crore funding (2023-28).
- Over 2.65 crore applications received; 27.13 lakh artisans registered.
- Prime Minister’s Employment Generation Programme (PMEGP)
- ₹3,093.87 crore subsidy disbursed in 2023-24.
- 89,118 enterprises supported, generating 7.12 lakh jobs.
- SFURTI Scheme (Traditional Industries Revitalization)
- 513 clusters approved since 2014.
- 2 lakh artisans benefited.
- Public Procurement Policy for MSMEs
- 71% of government procurement from MSMEs (₹74,717 crore in 2023-24).
Conclusion
The Union Budget 2025-26 delivers a comprehensive growth strategy for MSMEs by enhancing credit access, sector-specific incentives, and digitization initiatives. With increased budget allocation, improved financing mechanisms, and special support for startups and first-time entrepreneurs, MSMEs are poised to play a stronger role in India’s economic and export expansion.
