FM Sitharaman Announces Credit Boost for MSMEs to Foster Employment and Growth

Ms. Sitharaman announced that the investment and turnover limits for MSMEs would be increased by 2.5 and 2 times, respectively, to facilitate growth. This move is designed to help businesses improve their capacity and performance while encouraging expansion.

In addition, the government will enhance the credit guarantee cover for micro and small enterprises to Rs 10 crore, up from the current Rs 5 crore. Ms. Sitharaman also stated that an additional credit of Rs 1.5 lakh crore would be provided to MSMEs over the next five years. For startups, the credit guarantee cover will increase to Rs 20 crore from the current Rs 10 crore, with a reduction in the guarantee fee to just 1 percent for loans in 27 focus sectors. These sectors, she emphasized, are vital for the realization of an ‘Aatmanirbhar’ Bharat (Self-reliant India).

“MSMEs, as a second engine, encompass manufacturing and services with a focus on the 5.7 crore MSMEs. Currently, over 1 crore registered MSMEs, employing 7.5 crore people and contributing 36 percent to our manufacturing, are helping position India as a global manufacturing hub,” Ms. Sitharaman remarked while presenting her eighth consecutive Union Budget.

Ms. Sitharaman further highlighted that MSMEs are responsible for 45 percent of India’s total exports.

In an additional move to support micro enterprises, the government will launch customized credit cards for those registered on the Udyam Portal, offering a limit of Rs 5 lakh. At least 10 lakh cards will be issued in the first year. Furthermore, the government will offer a Rs 2 crore term loan for 5 lakh first-time women, Scheduled Caste (SC), and Scheduled Tribe (ST) entrepreneurs, ensuring that the growth of MSMEs is inclusive and empowering.