BENGALURU: In a major boost to micro, small, and medium enterprises (MSMEs), Finance Minister Nirmala Sitharaman has announced that the credit guarantee cover for MSMEs will be doubled from Rs 5 crore to Rs 10 crore, unlocking an additional Rs 1.5 lakh crore in credit over the next five years.
With over 1 crore registered MSMEs employing 7.5 crore people and contributing 36 per cent to the country’s manufacturing sector, this move is expected to strengthen their growth and financial stability.
Sanjay Agarwal, Senior Director at CareEdge Ratings, highlighted the existing credit gap in the sector. "MSMEs have an estimated credit gap of around ₹28 lakh crore. Banks account for a significant share of MSME lending. For export-oriented MSMEs, term loans up to Rs 20 crore would enable them to access funds for capital expenditure and working capital at competitive rates."
The Finance Minister further emphasised the role of MSMEs in India's exports. "With their quality products, these MSMEs are responsible for 45 per cent of our exports. To help them achieve higher efficiencies of scale, technological upgradation, and better access to capital, the investment and turnover limits for classification of all MSMEs will be enhanced to 2.5 and 2 times, respectively. This will give them the confidence to grow and generate employment for our youth."
Another significant announcement in the Budget is the introduction of customised credit cards with a Rs 5 lakh limit for micro enterprises registered on the Udyam portal. "In the first year, 10 lakh such cards will be issued," Sitharaman stated.
Additionally, the Centre will establish an Export Promotion Mission to facilitate easy access to export credit, cross-border factoring support, and assistance for MSMEs in tackling non-tariff measures in overseas markets.
E-commerce firm Meesho welcomed the increase in investment and turnover limits for MSME classification, calling it a game-changer for scaling up businesses. "The big boost for sectors such as toys, footwear, and many others will lead to improved domestic capabilities in manufacturing and exports," said Dhiresh Bansal, Chief Financial Officer at Meesho.