04 Feb 2025

MSMEs-Strengthening-Small-Businesses-for-Global-Competitiveness-Budget-2025-26-Highlights

MSMEs-Strengthening-Small-Businesses-for-Global-Competitiveness-Budget-2025-26-Highlights

MSMEs: Strengthening Small Businesses for Global Competitiveness-(Budget 2025-26 Highlights)

Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India's economy, contributing nearly 45% to the country’s exports and significantly driving employment and innovation. Recognizing their critical role, the Union Budget 2025-26 has introduced several key reforms aimed at fostering growth, increasing access to capital, and enhancing global competitiveness.

Key Budgetary Reforms for MSMEs

1. Revised MSME Classification: Expanding Growth Potential

To facilitate greater participation in the economy and enable MSMEs to scale operations efficiently, the Budget 2025-26 has enhanced the investment and turnover thresholds for MSME classification. This reclassification will allow businesses to access additional financial support and technological advancements.

Entity Size Current Investment Limit (INR) Revised Investment Limit (INR) Current Turnover Limit (INR) Revised Turnover Limit (INR)
Micro Enterprises 10 million 25 million 50 million 100 million
Small Enterprises 100 million 250 million 500 million 1 billion
Medium Enterprises 500 million 1.25 billion 2.5 billion 5 billion

This expansion will help more businesses qualify as MSMEs, thereby accessing government incentives, lower interest rates, and tax benefits.

2. Financial Assistance for First-Time Entrepreneurs

A new scheme targeting first-time entrepreneurs from Scheduled Castes (SC), Scheduled Tribes (ST), and women aims to foster inclusivity in business growth. Over the next five years, this initiative will provide term loans of up to INR 20 million to 500,000 entrepreneurs, empowering them with the necessary financial support to establish and expand their ventures.

3. National Manufacturing Mission: Strengthening Make in India

The Budget has introduced the National Manufacturing Mission to integrate MSMEs into global value chains. This mission will focus on:

  • Toy Manufacturing: Positioning India as a global hub for sustainable and competitive toy production.

  • Clean-Tech Manufacturing: Encouraging climate-friendly production practices to align with sustainability goals.

  • Workforce Development: Enhancing skill development to create a future-ready workforce that meets the demands of high-growth industries.

4. Digital & Financial Support Initiatives

  • MSME Digitization Program: Incentives for MSMEs to adopt digital tools and cloud-based platforms, improving efficiency and market outreach.

  • Credit Enhancement Measures: Easier access to collateral-free loans and refinancing options to support MSME liquidity and working capital requirements.

  • Tax Relief & Compliance Simplification: Reduced compliance burden for small businesses, ensuring easier tax filing and regulatory adherence.

Impact of Budget 2025 on MSMEs

The Budget’s initiatives aim to create a more robust ecosystem for MSMEs, with the following key impacts:

  1. Increased Financial Accessibility: With higher investment and turnover limits, more businesses can qualify for MSME benefits, leading to enhanced access to capital and credit.

  2. Boost to Manufacturing & Exports: Strengthened support for local manufacturing will help India become a key player in global supply chains.

  3. Encouragement of Entrepreneurial Growth: Financial assistance for first-time entrepreneurs, especially from marginalized communities, will promote inclusive economic development.

  4. Technological Advancements & Digital Integration: Encouraging digital adoption will improve business efficiency and competitiveness in both domestic and international markets.

  5. Workforce Development for Emerging Industries: Training programs under the National Manufacturing Mission will equip the workforce with skills required for high-demand sectors.

Conclusion

The Union Budget 2025-26 takes a significant step towards enhancing MSME growth by increasing financial accessibility, fostering innovation, and integrating small businesses into global markets. With strategic support measures and revised classification criteria, MSMEs are well-positioned to become stronger contributors to India’s economic expansion and global trade competitiveness. The reforms not only empower existing businesses but also encourage new enterprises, paving the way for a more resilient and inclusive economic landscape.

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Article Compiled by:-

~Mayank Garg

(LegalMantra.net Team)

Disclaimer: Every effort has been made to avoid errors or omissions in this material in spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition In no event the author shall be liable for any direct indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information Many sources have been considered including Newspapers, Journals, Bare Acts, Case Materials , Charted Secretary, Research Papers etc.