Implications of Budget on MSME
The Budget 2025 had two broad themes: tax relief for India’s middle class and the government’s intent to mostly stay away from business affairs.
A major theme during this year’s Union Budget was putting more money into the hands of the middle class and increasing consumption and spending power. This comes as shoppers have tightened their purse strings of late in the face of inflation and slow wage growth.
The Budget also gave a nod to the emerging tech we’ve all been talking about: AI, deeptech startups won big with a Rs 20,000 crore Fund of Funds to fuel research and development.
The Budget 2025 had two broad themes: tax relief for India’s middle class and the government’s intent to mostly stay away from business affairs.
The tax sop is a typical demand-led growth idea, with the expectation that this would lead to enhanced consumption, which would then spur businesses to invest to meet the higher demand. The investments could then lead to more jobs and higher incomes.
Key takeaways:
Under a new tax plan, those earning up to Rs 12 lakh won’t have to pay any income tax. Earlier, it was at an income of Rs 7 lakh that one didn’t have to pay any tax.
Startup categories such as ecommerce could benefit from the consumption boost that comes with the tax slab change.
Re Classification of MSME sector by 2.5 times and turnover limits will double promoting technological upgradation and better access to capital, credit guarantee cover for MSME has increased from 5 crores to 10 crores, unlocking an additional Rs 1.5 lakh crore credit over the next 5 years
The second big takeaway is the government’s intent to pull back from too much regulation. “A light-touch regulatory framework based on principles and trust will unleash productivity and employment,” Sitharaman said.
Implication of Budget on MSME
The Union Budget of India allocates funds to Micro, Small, and Medium Enterprises (MSMEs) to help them grow and compete. The budget for MSMEs includes increased credit limits, revised classification criteria, and new schemes.
Now the MSMEs can look forward to better working capital access and financial support for growth. This Budget doubles the credit guarantee limit from ₹5 crore to ₹10 crore for micro and small enterprises, and from ₹10 crore to ₹20 crore for startups in key sectors
Budget allocations
* The Union Ministry of Micro, Small, and Medium Enterprises was allocated Rs 23,168 crore for 2025-26.
* The budget increased the credit guarantee limit for MSMEs.
* The budget announced a new fund of funds for startups with Rs 10,000 crore.
Classification criteria
* The budget revised the investment and turnover limits for MSMEs.
* The revised criteria aim to bring more businesses under the MSME definition.
Schemes
* The budget announced new schemes for startups and women entrepreneurs from scheduled castes and tribes.
* The budget announced customized credit cards with a Rs 5 lakh limit for micro-enterprises.
Benefits
* The revised criteria are expected to help MSMEs scale up, improve competitiveness, and enter new markets.
* The revised criteria are expected to help MSMEs access affordable credit and financial support for growth.