chapter 17

Empowering MSMEs: New Budget Boosts Growth OpportunitiesIn a significant move aimed at strengthening India's entrepreneurial landscape, the recent central budget has introduced substantial reforms for Micro, Small, and Medium Enterprises (MSMEs). These changes are set to expand the sector and improve access to government benefits.MSMEs play a crucial role in India's economic growth, contributing significantly to GDP, exports, and job creation. Recognizing their importance, the government has periodically updated the MSME classification criteria to better reflect the evolving business environment and facilitate access to essential benefits such as loans, subsidies, and tax incentives.In the Union Budget 2025, Finance Minister Nirmala Sitaraman announced major updates to the MSME classification, significantly increasing limits in investment  plant and machineries  by 2.5 times and the turnover limits by double of the existing limits. These revisions are designed to foster growth, promote innovation, and create a more supportive ecosystem for MSMEs to thrive.The revised criteria categorize enterprises based on their investment in plant and machinery, along with turnover thresholds:Micro Enterprises: Investment in Plant and Machinery increased from Rs. 1 crore to Rs. 2.5 crores. Turnover limit raised from Rs. 2.5 crores to Rs. 5 crores.Small Enterprises: Investment in plant and machinery increased from Rs. 10 crores to Rs. 25 crores. Turnover limit increased from Rs. 50 crores to Rs. 100 crores.Medium Enterprises: Investment in plant and machinery increased from Rs. 50 crores to Rs. 125 crores. Turnover limit increased from Rs. 250 crores to Rs. 500 crores.These updated limits aim to include a wider range of businesses under the MSME umbrella, making it easier for them to qualify for MSME status and gain access to financial support and incentives.Enhanced Credit Guarantee CoverAcknowledging the critical role of credit in business expansion, the budget has doubled the credit guarantee cover:Micro and Small Enterprises: Increased from Rs. 5 crores to Rs. 10 crores, facilitating an additional credit of Rs. 1.50 lakh crore over the next five years.Startups: Guarantee cover doubled from Rs. 10 crores to Rs. 20 crores, with reduced loan fees of 1% in 27 priority sectors.Impact and Future OutlookThese progressive measures are expected to stimulate entrepreneurship, drive innovation, and propel economic growth. By expanding opportunities for MSMEs to flourish, the government aims to create a conducive environment for job creation and sustainable development across various sectors.The revised MSME classification and enhanced credit guarantees represent a bold initiative to empower small businesses, ensuring they have the necessary resources to scale up and contribute significantly to India's economic resurgence.CA  V. K. S. Shetty01/03/2025