Union Budget 2025: Investment Limit In MSMEs To Be Increased By 2.5X

Union Budget 2025: Investment Limit In MSMEs To Be Increased By 2.5X

SUMMARY

Nirmala Sitharaman today (on Saturday) announced that the investment and turnover limits for the classification of all MSMEs will be enhanced by 2.5X and 2X

“This will give them the confidence to grow and generate employment for the youth,” Sitharaman said while announcing the Union Budget 2025

The FM said that currently over 1 Cr registered MSMEs employ 5.7 Cr people and contribute to 36% of the country’s manufacturing

During her budget speech on Saturday (February 1), finance minister Nirmala Sitharaman announced that the investment and turnover limits for the classification of all MSMEs will be enhanced by 2.5X and 2X, respectively. 

“This will give them the confidence to grow and generate employment for the youth,” Sitharaman said. 

The FM said that currently over 1 Cr registered MSMEs employ 5.7 Cr people and contribute to 36% of the country’s manufacturing. She added that Indian MSMEs have come together to project India as a global manufacturing hub with quality products. 

“These MSMEs are responsible for 45% of the country’s exports,” Sitharaman said. 

FM further announced that the government will introduce customised credit cards with an INR 5 Lakh limit for micro-enterprises registered on Udyam portal.

“In the first year, 10 Lakh such cards will be issued,” Sitharaman said. 

The government also announced to enhance the credit guarantee coverage for MSMEs. Its contours are as follows:

    1. For micro and small enterprises, credit guarantee has been enhanced from INR 5 Cr to 10 Cr. 
    2. For startups, the credit guarantee has been enhanced from INR 10 Cr to 20 Cr, with the guarantee fee moderated to 1% for loans in “27 focus sectors important for Atmanirbhar Bharat”. 
    3. The well-run exporter MSMEs can apply term loans of up to INR 20 Cr.

“While these measures are promising, it is crucial to address the persistent challenges that MSMEs face. Access to timely and affordable credit remains a hurdle for many small businesses. Streamlining the loan disbursement process and reducing bureaucratic red tape are essential to ensure that the intended benefits reach the grassroots level,” said Mukul Goyal, cofounder of Stratefix Consulting.

This comes as the government recently unveiled the micro and small enterprises-cluster development programme (MSE-CDP) to develop business clusters across the country. 

The programme will provide a common facility centre, which will act as a channel to address common issues such as technology development, skills, and quality, among others, for MSEs.

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