New definition for MSMEs, increased credit guarantee
In her Budget speech, the FM said the investment and turnover limits for classification of all MSMEs will be increased 2.5 and two times respectively.
Giving new definitions for micro, small and medium enterprises (MSMEs) and announcing a slew of initiatives to help such businesses, Finance Minister Nirmala Sitharaman on Saturday termed them the second power engine for development.
In her Budget speech, she said the investment and turnover limits for classification of all MSMEs will be increased 2.5 and two times respectively.
This means the investment limit to be classified as a micro enterprise goes up to Rs 2.5 crore. For small enterprises, this limit goes up to Rs 25 crore, and for medium ones, it becomes Rs 125 crore. Similarly, the turnover limit for these classifications goes up to Rs 10 crore for micro enterprises, Rs 100 crore for small ones, and Rs 500 crore for medium enterprises.
“Currently, over one crore registered MSMEs, employing 7.5 crore people, and generating 36% of our manufacturing, have come together to position India as a global manufacturing hub. With their quality products, these MSMEs are responsible for 45% of our exports,” said the Finance Minister.
Sitharaman also announced the launch of a new scheme that will provide term loans up to Rs 2 crore during the next five years for first-time entrepreneurs who are women or belong to the Scheduled Castes and Scheduled Tribes.
She said that the government would also implement a scheme to make India a global hub for toys.
“Building on the National Action Plan for Toys, we will implement a scheme to make India a global hub for toys. The scheme will focus on the development of clusters, skills, and a manufacturing ecosystem that will create high-quality, unique, innovative, and sustainable toys that will represent the ‘Made in India’ brand,” she said.
She also announced the enhancement of the credit guarantee cover from Rs 5 crore to Rs 10 crore for micro and small enterprises, and from Rs 10 crore to Rs 20 crore for startups. As part of the initiatives for MSMEs, she announced that a National Institute of Food Technology, Entrepreneurship and Management will be established in Bihar.
The Finance Minister also said a focus product scheme would be implemented for India’s footwear and leather sector.
“The scheme will support design capacity, component manufacturing, and machinery required for the production of non-leather quality footwear, besides the support for leather footwear and products. The scheme is expected to facilitate employment for 22 lakh persons, generate turnover of 4 lakh crore and exports of over 1.1 lakh crore,” said the minister.
Customised credit cards with Rs 5 lakh limit were also announced in the Budget for micro enterprises registered on the Udyam portal. In the first year, 10 lakh such cards will be issued.
Sitharaman also emphasised the need for a light touch regulatory framework based on principles and trust, which could unleash productivity and employment. Through such a framework, regulations made under old laws would be updated.
The government plans to set up a high-level committee for regulatory reforms, which will review all non-financial sector regulations.
The Economic Survey 2024-25 has said that deregulation is more critical for MSME growth than large enterprises.
Giving new definitions for micro, small and medium enterprises (MSMEs) and announcing a slew of initiatives to help such businesses, Finance Minister Nirmala Sitharaman on Saturday termed them the second power engine for development.
In her Budget speech, she said the investment and turnover limits for classification of all MSMEs will be increased 2.5 and two times respectively.
This means the investment limit to be classified as a micro enterprise goes up to Rs 2.5 crore. For small enterprises, this limit goes up to Rs 25 crore, and for medium ones, it becomes Rs 125 crore. Similarly, the turnover limit for these classifications goes up to Rs 10 crore for micro enterprises, Rs 100 crore for small ones, and Rs 500 crore for medium enterprises.
“Currently, over one crore registered MSMEs, employing 7.5 crore people, and generating 36% of our manufacturing, have come together to position India as a global manufacturing hub. With their quality products, these MSMEs are responsible for 45% of our exports,” said the Finance Minister.
Sitharaman also announced the launch of a new scheme that will provide term loans up to Rs 2 crore during the next five years for first-time entrepreneurs who are women or belong to the Scheduled Castes and Scheduled Tribes.
She said that the government would also implement a scheme to make India a global hub for toys.
“Building on the National Action Plan for Toys, we will implement a scheme to make India a global hub for toys. The scheme will focus on the development of clusters, skills, and a manufacturing ecosystem that will create high-quality, unique, innovative, and sustainable toys that will represent the ‘Made in India’ brand,” she said.
She also announced the enhancement of the credit guarantee cover from Rs 5 crore to Rs 10 crore for micro and small enterprises, and from Rs 10 crore to Rs 20 crore for startups. As part of the initiatives for MSMEs, she announced that a National Institute of Food Technology, Entrepreneurship and Management will be established in Bihar.
The Finance Minister also said a focus product scheme would be implemented for India’s footwear and leather sector.
“The scheme will support design capacity, component manufacturing, and machinery required for the production of non-leather quality footwear, besides the support for leather footwear and products. The scheme is expected to facilitate employment for 22 lakh persons, generate turnover of 4 lakh crore and exports of over 1.1 lakh crore,” said the minister.
Customised credit cards with Rs 5 lakh limit were also announced in the Budget for micro enterprises registered on the Udyam portal. In the first year, 10 lakh such cards will be issued.
Sitharaman also emphasised the need for a light touch regulatory framework based on principles and trust, which could unleash productivity and employment. Through such a framework, regulations made under old laws would be updated.
The government plans to set up a high-level committee for regulatory reforms, which will review all non-financial sector regulations.
The Economic Survey 2024-25 has said that deregulation is more critical for MSME growth than large enterprises.
