Budget 2025 Boosts MSMEs: Higher Limits & Better Credit Access

The Union Budget 2025 has introduced several key measures to strengthen India’s Micro, Small, and Medium Enterprises (MSME) sector. Recognizing the sector’s vital role in job creation and economic growth, Finance Minister Nirmala Sitharaman announced reforms aimed at improving credit access, easing financial constraints, and enhancing global competitiveness for MSMEs.

Key Announcements for MSMEs

1. Credit Guarantee Cover Doubled

To address financing challenges, the government has increased the credit guarantee cover for micro and small enterprises from ?5 crore to ?10 crore. This move is expected to unlock an additional ?1.5 lakh crore in credit, helping MSMEs expand operations, invest in new technology, and improve productivity.

2. MSME Credit Cards Introduced

A new credit card scheme will provide micro-entrepreneurs with a ?5 lakh limit, ensuring easier access to working capital. These cards will be issued to businesses registered on the Udyam portal, simplifying financial management and reducing dependence on high-interest loans.

3. Revised Investment & Turnover Limits

The investment and turnover limits for MSMEs have been raised by 2.5 times and 2 times, respectively. This change encourages businesses to scale up operations without losing their MSME status and associated benefits such as tax incentives and priority lending.

4. Export Support for MSMEs

To strengthen India’s position in global trade, the government will provide term loans of up to ?20 crore for export-driven MSMEs. This initiative aims to boost their competitiveness and expand their reach in international markets.

5. Launch of Export Promotion Mission

A dedicated Export Promotion Mission will be set up to assist MSMEs with export credit access, cross-border factoring, and navigating non-tariff barriers. This mission will help small businesses tap into global opportunities and drive India’s export growth.

Impact on India’s MSME Sector

With over 1 crore MSMEs employing 7.5 crore people and contributing 36% to manufacturing, these reforms will drive growth, enhance financial access, and boost global competitiveness. Budget 2025 strengthens the MSME ecosystem, reinforcing its role in India's economic progress.

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