New Delhi [India], February 1 : In a major push to strengthen the Micro, Small, and Medium Enterprises (MSME) sector, the Union Finance Minister in budget 2025 announced an increase in investment and turnover limits for the classification of MSMEs.
The minister recognized the unique financial needs of micro-enterprises, and introduced customized credit cards with a limit of Rs 5 lakh.
FM said "for the micro-enterprises, we will introduce customized credit cards with a 5 lac rupee limit for micro-enterprises registered on Udhyam portal".
These cards will be available to businesses registered on the Udyam portal, ensuring financial support for small-scale entrepreneurs. In the first year, 10 lakh such credit cards will be issued.
To ensure easier access to credit, the government has also enhanced the credit guarantee cover for micro and small enterprises. The coverage will now increase from Rs 5 crore to Rs 10 crore, leading to an additional credit of Rs 1.5 lakh crore over the next five years. This will support small businesses in expanding their operations without financial constraints
The MSME investment limit will be raised by 2.5 times, while the turnover limit will be increased by 2 times. This move aims to help businesses scale up, adopt better technology, and improve access to capital.
FM in her speech said, "To help them achieve higher efficiencies of scale, technological upgradation, 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".
The government believes these changes will provide MSMEs with the confidence to grow, expand operations, and generate more employment opportunities for the youth. Additionally, measures are being taken to improve credit availability for the sector.
Similarly, startups will benefit from a rise in credit guarantee cover from Rs 10 crore to Rs 20 crore. The guarantee fee for loans in 27 key sectors crucial to the Aatmanirbhar Bharat initiative will be moderated to 1 per cent.
Additionally, well-performing exporter MSMEs will now have access to term loans of up to Rs 20 crore, further strengthening India's position in global markets.
FM said "Also for the micro-enterprises, we will introduce customized credit cards with a 5 lac rupee limit for micro-enterprises registered on Udhyam portal. In the first year, 10 lakh such cards will be issued".
The finance minister has also announced the creation of a new Fund of Funds to support startups. The existing Alternate Investment Fund (AIF) for startups has already received commitments of over Rs 91,000 crore, backed by the government's Rs 10,000 crore contribution.
To further encourage innovation and entrepreneurship, the FM stated that a fresh Rs 10,000 crore contribution will be made under the new Fund of Funds.
With 5.7 crore MSMEs operating across manufacturing and services, the sector is crucial to India's economy. More than 1 crore registered MSMEs currently employ 7.5 crore people and contribute 36 per cent of the country's manufacturing output. Additionally, MSMEs play a vital role in India's exports, accounting for 45 per cent of the total share.
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