NEW DELHI: In a bid to support Micro, Small, and Medium Enterprises (MSME), Finance Minister Nirmala Sitharaman on Saturday announced increases in the investment and turnover limits for MSME classification, raising them by 2.5 and 2 times, respectively.
She highlighted that India has over 1 crore registered MSMEs, employing 7.5 crore people and contributing 36% to the country’s manufacturing output. These MSMEs are crucial in positioning India as a global manufacturing hub and are responsible for 45% of India’s exports.
Under the new changes, the investment limit for micro enterprises has more than doubled, rising from Rs 1 crore to Rs 2.5 crore, while the turnover threshold has been increased from Rs 5 crore to Rs 10 crore. Small enterprises will now have an investment limit of Rs 25 crore (up from Rs 10 crore) and a turnover limit of Rs 100 crore (up from Rs 50 crore).
Meanwhile, medium enterprises can now have investments up to Rs 125 crore (previously Rs 50 crore) and a turnover of up to Rs 500 crore (previously Rs 250 crore).
In addition to the changes in classification limits, the government has increased the credit guarantee coverage for MSMEs. For micro and small enterprises, the guarantee cover will rise from Rs 5 crore to Rs 10 crore, unlocking an additional Rs 1.5 trillion in credit over next five years.
“Startups, which have become a major driver of innovation in India, will also benefit from enhanced credit facilities, with the guarantee limit increased from Rs 10 crore to Rs 20 crore, along with a reduction in guarantee fees,” Sitharaman added.
To further assist micro-enterprises, the Budget introduces a customised credit card with Rs 5 lakh limit, targeting the 10 lakh MSMEs registered on the Udyam Portal in its first year. This initiative aims to improve access to credit and support small businesses in their growth journey.