Union Budget: Key measures to bolster 1 crore MSMEs, 1.59 lakh startups

Union Finance Minister Nirmala Sitharaman on Saturday announced significant measures to bolster more than 1 crore registered micro, small, and medium enterprises (MSMEs), employing 7.5 crore people and generating 36 per cent of the country’s manufacturing.

With their quality products, these MSMEs are responsible for 45 per cent of our exports, the Finance Minister said while presenting the Budget 2025-26.

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.

"This will give them the confidence to grow and generate employment for our youth," said the Finance Minister.

To improve access to credit, the credit guarantee cover will be enhanced. For micro and small enterprises, it will be enhanced from Rs 5 crore to 10 crore, leading to additional credit of Rs 1.5 lakh crore in the next 5 years.

"For startups, it will be increased from Rs 10 crore to Rs 20 crore, with the guarantee fee being moderated to 1 per cent for loans in 27 focus sectors important for Atmanirbhar Bharat," FM Sitharaman said, adding that for well-run exporter MSMEs, credit availability with guarantee cover will be for term loans up to Rs 20 crore.

“We will introduce customised credit cards with a Rs 5 lakh limit for micro-enterprises registered on Udyam portal. In the first year, 10 lakh such cards will be issued," she said.

The Alternate Investment Funds (AIFs) for startups have received commitments of more than Rs 91,000 crore. These are supported by the Fund of Funds, set up with a government contribution of Rs 10,000 crore.

Now, a new Fund of Funds, with an expanded scope and a fresh contribution of another Rs 10,000 crore will be set up.

A new scheme will be launched for 5 lakh women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs. This will provide term loans up to Rs 2 crore during the next 5 years.

The scheme will incorporate lessons from the successful Stand-Up India scheme. Online capacity building for entrepreneurship and managerial skills will also be organised, the Finance Minister said.

To promote employment and entrepreneurship opportunities in labour-intensive sectors, "our government will undertake specific policy and facilitation measures", FM Sitharaman added.

With more than 1.59 lakh startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) as of January 15, India has firmly established itself as the third-largest startup ecosystem in the world.