Union Budget 2025-26 Empowers MSMEs with Higher Credit Limits, ₹10,000 Cr Fund, and Sector-Specific Growth Initiatives

The Union Budget 2025-26 has introduced a series of impactful measures to strengthen India’s Micro, Small, and Medium Enterprises (MSMEs), recognizing their crucial role in the country’s economic growth. With over 5.93 crore registered MSMEs employing more than 25 crore people, the sector significantly contributes to manufacturing, exports, and job creation. In 2023-24, MSME-related products accounted for 45.73% of India’s total exports, reinforcing India’s position as a global manufacturing powerhouse.

Key highlights of this year’s budget include a credit guarantee cover increase from ₹5 crore to ₹10 crore, unlocking an additional ₹1.5 lakh crore in credit over the next five years. This will enhance MSME access to financing, fostering business expansion and technological advancements. Additionally, the credit guarantee for startups has doubled from ₹10 crore to ₹20 crore, with a 1% lower loan fee across 27 priority sectors. Export-oriented MSMEs can now access term loans up to ₹20 crore, further strengthening their international competitiveness.

The budget also introduces a ₹10,000 crore Fund of Funds to support startups and includes a dedicated loan scheme for 5 lakh first-time entrepreneurs from disadvantaged backgrounds, including women, Scheduled Castes, and Scheduled Tribes. Under this scheme, eligible entrepreneurs can avail loans of up to ₹2 crore over the next five years.

To boost labour-intensive industries, sector-specific initiatives have been launched. The footwear and leather industry is set to create 22 lakh new jobs and achieve a ₹4 lakh crore turnover under the Focus Product Scheme. A new scheme for toy manufacturing aims to establish India as a global production hub.

Through these strategic measures, the government is empowering MSMEs with enhanced financial support, sectoral growth incentives, and an ecosystem primed for expansion, innovation, and global competitiveness.