Union Budget: Major Initiatives for 1 Crore MSMEs and 1.59 Lakh Startups

New Delhi, Feb 1 (NationPress) Union Finance Minister Nirmala Sitharaman on Saturday unveiled crucial initiatives aimed at uplifting over 1 crore registered micro, small, and medium enterprises (MSMEs), which provide employment to 7.5 crore individuals and contribute 36 percent to the nation's manufacturing sector. These MSMEs play a vital role in the economy, accounting for 45 percent of exports, as highlighted by the Finance Minister during the presentation of the Budget 2025-26.

To enhance operational efficiencies, facilitate technological advancements, and improve capital access, the investment and turnover thresholds for MSME classification will be raised to 2.5 and 2 times, respectively.

"This initiative aims to instill confidence in these businesses, enabling them to expand and create jobs for our youth," stated the Finance Minister.

To boost credit access, the credit guarantee coverage will see an increase. Specifically, for micro and small enterprises, it will rise from Rs 5 crore to 10 crore, leading to an additional Rs 1.5 lakh crore in credit within the next five years.

"For startups, the limit will be elevated from Rs 10 crore to Rs 20 crore, with the guarantee fee reduced to 1 percent for loans in 27 focus sectors crucial for Atmanirbhar Bharat," FM Sitharaman elaborated, adding that well-performing exporter MSMEs will have access to credit with guarantee cover for term loans up to Rs 20 crore.

“We will launch customized credit cards with a Rs 5 lakh limit specifically for micro-enterprises registered on the Udyam portal, with 10 lakh of these cards to be issued in the first year,” she mentioned.

The Alternate Investment Funds (AIFs) for startups have garnered commitments exceeding Rs 91,000 crore, backed by the Fund of Funds, which received a government contribution of Rs 10,000 crore.

A new Fund of Funds will be established with an extended mandate and an additional contribution of Rs 10,000 crore.

A novel scheme will target 5 lakh women, Scheduled Castes, and Scheduled Tribes as first-time entrepreneurs, offering term loans of up to Rs 2 crore over the next five years.

This scheme will incorporate insights from the successful Stand-Up India initiative. Online capacity-building programs for entrepreneurship and managerial skills will also be implemented, according to the Finance Minister.

To foster employment and entrepreneurship in labor-intensive sectors, "our government will implement specific policies and facilitation measures," FM Sitharaman noted.

With over 1.59 lakh startups recognized 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 globally.