In the Union Budget 2025, the expansion of the Micro, Small and Medium Enterprise (MSME) definition is a strategic step that could bring more businesses under the ambit of government benefits. This move acknowledges the evolving nature of businesses, ensuring that more enterprises gain access to credit, subsidies and regulatory advantages. However, for it to be effective, the government must ensure that the reclassification does not lead to unnecessary bureaucratic roadblocks, making it harder for businesses to access the promised benefits.
One of the most significant announcements is the doubling of the credit guarantee cover for micro and small enterprises to Rs 10 crore, unlocking Rs 1.5 lakh crore in additional credit over five years. This is a much-needed relief for businesses struggling with liquidity issues. Additionally, startups now have access to a credit cover of Rs 20 crore, which could significantly boost innovation. Exporters, too, have been brought under the fold, ensuring that businesses looking beyond domestic markets receive necessary financial backing. However, access to credit is just one part of the puzzle—its proper utilisation and efficient deployment will determine its real impact.
The introduction of a Re 5 lakh credit card under the Udyam portal for micro enterprises is another commendable step. With 10 lakh cards set to be issued in the first year, this initiative aims to provide immediate liquidity support to small businesses. While this move aligns well with financial inclusion goals, its success will depend on how smoothly it integrates with the existing banking frameworks. Will banks be proactive in issuing these cards, or will MSMEs struggle with procedural delays?
The Re 10,000 crore Fund of Funds for high-growth startups signals the government’s ambition to nurture entrepreneurship at scale. Expanding the scope of Alternative Investment Funds (AIFs) and supplementing the existing Re 91,000-crore startup fund is a bold move. However, past experiences suggest that fund allocation alone does not guarantee success. Ensuring seamless disbursement, transparency and targetted investment in innovative startups will be the key to drive real impact.
Sector-specific incentives have been introduced to fuel job creation and revenue generation. The footwear and leather industry is expected to see 22 lakh new jobs and Rs 1.1 lakh crore in revenue, while the toy industry will get a push under the ‘Make in India’ initiative. Food processing is another focus area, with the establishment of the National Institute of Food Technology, Entrepreneurship and Management in Bihar. While these steps highlight the government’s commitment to industry-specific growth, there needs to be an equal emphasis on implementation frameworks, skill development and infrastructure support.
The National Manufacturing Mission, with its emphasis on clean technology and export promotion, presents an ambitious vision. The push for solar PV cells, EV batteries and wind turbines could establish India as a global hub for green energy manufacturing. However, without incentives for Research and Development (R&D), ease of regulatory compliance and long-term policy stability, these efforts may fall short of their full potential.
While the budget lays out a promising roadmap, the onus is now on MSMEs to capitalise on these opportunities. Beyond government support, businesses must focus on digital transformation, financial literacy and global expansion. Equally important is the need for a robust monitoring mechanism to track the actual impact of these initiatives. If implemented effectively, these measures can drive unprecedented growth for MSMEs. Otherwise, those risk becoming yet another set of well-intended, but under-delivered policy measures.
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