Context:

Recently, the Union Budget 2025-26 updated the Micro, Small and Medium Enterprises (MSMEs) classification.

More on the News

• MSMEs classifications are revised to achieve higher efficiencies of scale, technological upgradation and better access to capital.
• The Union Budget defines MSMEs as one of the powerful engines for the story of development and the proposed development measures support MSMEs to accelerate growth and secure inclusive development. 

Other initiatives taken related to MSMEs

• Credit Cards for Micro Enterprises: Customized Credit Cards with a 5 lakh limit for micro-enterprises registered on the Udyam portal will be introduced and 10 lakh such cards will be issued in the first year.

Fund of Funds for Startups: 

• The Alternate Investment Funds (AIFs) for startups have received commitments of more than 91,000 crore supported by the Fund of Funds set up with a Government contribution of 10,000 crore. 
• The Finance Minister announced that now, a new Fund of Funds, with expanded scope and a fresh contribution of another 10,000 crore will be set up.

Scheme for First-time Entrepreneurs:

• A new scheme will be launched for 5 lakh women, Scheduled Castes and Scheduled Tribes first-time entrepreneurs, it will provide term loans up to 2 crore during the next 5 years.

Deep Tech Fund of Funds: 

• A Deep Tech Fund of Funds will also be explored to catalyze the next-generation startups as a part of this initiative.

Export Promotion Mission: 

• An Export Promotion Mission, with sectoral and ministerial targets, driven jointly by the Ministry of Commerce, Ministry of MSME, and Ministry of Finance will also be set up.
• It will facilitate easy access to export credit, cross-border factoring support, and support to MSMEs to tackle non-tariff measures in overseas markets.

Significant enhancement of credit availability with guarantee cover:

• For Micro and Small Enterprises, from 5 crore to 10 crore, leading to additional credit of 1.5 lakh crore in the next 5 years;
• For Startups, from 10 crores to 20 crores, with the guarantee fee being moderated to 1 per cent for loans in 27 focus sectors important for Atmanirbhar Bharat; and
• For well-run exporter MSMEs, for term loans up to 20 crore.
• The Credit Guarantee Scheme is a flagship scheme of the Ministry of MSME for providing collateral-free loans to Micro and Small Enterprises. 

Overview of the MSME Sector in India

• 5.70 crore MSMEs, with an employment of 24.14 crore are registered on Udyam Registration Portal and Udyam Assist Platform (UAP).
• 19.90 lakh guarantees have been approved amounting to Rs. 2.44 lakh crore during the period 1 January to 30th December 2024 under the Credit Guarantee Scheme.
• MSME exports have witnessed a remarkable rise, increasing from ₹3.95 lakh crore in 2020-21 to ₹12.39 lakh crore in 2024-25.
• The Gross Value Added (GVA) by MSMEs in India’s GDP was 29.7% in 2017-18, rising to 30.1% in both 2022-23.