Budget 2025-26: MSME Sector and Startups Receive Major Boost

In the Union Budget 2025-26, the government has provided significant enhancements to the MSME sector, which plays a crucial role in India’s manufacturing and export growth. With over 5.7 crore MSMEs contributing 36% to manufacturing and 45% to exports, the government has announced an increase in the investment and turnover limits for MSMEs, aiming to help them scale up, adopt new technologies, and gain better access to financing. Additionally, the credit guarantee scheme for Micro and Small Enterprises has been expanded, raising the cover from ₹5 crore to ₹10 crore, unlocking ₹1.5 lakh crore in credit over the next five years. A Focus Product Scheme has also been introduced for the footwear and leather sector, projected to create 22 lakh jobs and increase exports.

Startup Ecosystem Receives Strong Support with New Fund and Schemes

In a bid to further promote entrepreneurship, the Budget has introduced measures to support startups, including the establishment of a new Fund of Funds with a fresh contribution of ₹10,000 crore. This will expand the scope of the existing Fund, which has already secured over ₹91,000 crore in commitments. Additionally, the government has increased the credit guarantee cover for startups from ₹10 crore to ₹20 crore, with a 1% guarantee fee for loans in 27 focus sectors, facilitating easier access to capital. A new scheme for first-time entrepreneurs, targeting 5 lakh women, SC, and ST individuals, will provide loans up to ₹2 crore, alongside online capacity-building programs, reinforcing the government's commitment to nurturing innovation and supporting India's growing startup ecosystem.