Budget 2025: Boost for MSME Sector with Enhanced Credit and Classification Support

The Union Budget for FY26 announced by Union Finance Minister Nirmala Sitharaman is likely to focus on several major measures to further fortify the MSME sector backbone of India’s economic growth.

With more than 5.7 crore MSMEs in the country, which includes 1 crore registered businesses employing 7.5 crore people, these enterprises are central to India’s manufacturing strength and contribute 36% to the nation’s manufacturing output. Further, MSMEs play a critical role in boosting India’s export potential by making up 45% of the nation’s exports.

For the very vital sector, the credit guarantee cover for micro-enterprises was announced to be doubled from ₹5 crores to ₹10 crores. This move will unlock another ₹1.5 lakh crore of credit in the next five years and thus much-needed financial support for smaller businesses.

Another significant decision has been made by the government, increasing investment and turnover limits for MSME classification. Both the investment and turnover limits are increased by 2.5 times and 2 times respectively, which should help MSMEs to better access capital and make technological upgradations easier.

Furthermore, Sitharaman introduced customized credit cards with a ₹5 lakh limit specifically for micro-enterprises, aiming to address their pressing financial needs. This initiative is expected to empower businesses with more accessible and flexible funding options.

Industry experts have welcomed these measures. Jyoti Prakash Gadia, Managing Director at Resurgent India, said, “MSMEs can generate more employment and boost exports. The issuance of 10 lakh credit cards with ₹5 lakh limits each for micro-enterprises will enhance the financial accessibility manifold for those registered on the Udyam portal.”

Such announcements reflect the government’s commitment towards inclusive growth, and that MSMEs must continue to be the prime contributor to India’s economic development.