Government Initiatives for Micro, Small, and Medium Enterprises in India

Micro, Small, and Medium Enterprises (MSMEs) are vital to the Indian economy. These businesses often require support and protection from larger corporations due to limited access to resources and technology. Consequently, the government offers various schemes, financial incentives, and advisory services to assist these enterprises.

Budget 2025 Updates

• The classification of MSMEs has been revised to include a broader range of businesses and companies.
• Micro-enterprises registered on the Udyam portal will receive credit cards with a ₹5 lakh limit; 10 lakh cards are planned for issuance in the first year.
• A new Fund of Funds, with an expanded scope, will be launched with an allocation of ₹10,000 crore.
• A scheme targeting 5 lakh first-time women, Scheduled Caste (SC), and Scheduled Tribe (ST) entrepreneurs will provide term loans up to ₹2 crore over five years, complemented by online capacity-building initiatives.

Enterprise Classification Thresholds for MSMEs

Previously, the categorization of MSMEs was determined by the investment made in plant, machinery, or equipment. To qualify for MSME benefits, businesses had to keep their investments below certain thresholds. These initial limits were restrictive, hindering the expansion and progress of small and micro businesses. However, the Union Budget 2025 introduced a revised MSME classification designed to encompass and support a greater number of businesses, fostering broader growth.

Budget 2025: Updated MSME Categorization

Furthermore, the distinction between manufacturing and service sectors within the MSME definition has been eliminated, promoting equality across industries. This updated MSME classification encourages greater business scalability and fosters a more competitive environment.

Government-Initiated MSME Programs

Credit Cards for Micro Businesses

Micro-enterprises registered on the Udyam portal will receive a new, customizable credit card featuring a ₹5 lakh limit. The initial phase aims to distribute 10 lakh cards within the first year.

Program for Emerging Entrepreneurs

A new initiative will offer support to 5 lakh first-time women, Scheduled Caste (SC), and Scheduled Tribe (ST) entrepreneurs. This includes term loans up to ₹2 crore, repayable over five years, along with online training for developing entrepreneurial and managerial competencies, drawing inspiration from the successful Stand-Up India scheme.

Fund for Startup Investment

A new Fund of Funds will be established with an additional ₹10,000 crore contribution, significantly increasing support for startups. This expands upon the existing Fund of Funds, which has already facilitated over ₹91,000 crore in commitments through Alternative Investment Funds (AIFs).

Specialized Product Scheme for Footwear and Leather

A dedicated Focus Product Scheme will be launched to improve productivity, quality, and competitiveness within the footwear and leather sectors. It will provide assistance for design innovation, component manufacturing, and specialized machinery for both leather and non-leather footwear production. This project is projected to create 22 lakh jobs, generate a turnover of ₹4 lakh crore, and achieve exports exceeding ₹1.1 lakh crore.

National Manufacturing Initiative: Advancing "Make in India"

The government plans to introduce a National Manufacturing Mission to bolster small, medium, and large industries, aligning with the "Make in India" program. This mission will offer policy guidance, operational strategies, and a structured governance framework for both central ministries and state governments.

Promoting Clean Technology Manufacturing

This mission is designed to support the manufacturing of Clean Tech products, aligning with India's commitment to climate-conscious development. It will prioritize increasing domestic value addition and building an ecosystem for critical components such as solar PV cells, electric vehicle (EV) batteries, motors, electrolyzers, wind turbines, high-voltage transmission equipment, and grid-scale batteries.

Business Incubation Program

This scheme assists innovators in bringing their new designs, concepts, or products to fruition. The government can finance between 75% and 80% of the project cost under this program, thereby fostering the development of novel ideas and products.

Credit-Linked Capital Subsidy Initiative

This initiative provides new technology to business owners, enabling them to replace outdated equipment. A capital subsidy is granted to enterprises for upgrading their operations, thereby enhancing their business efficiency. Small, micro, and medium enterprises can apply for these subsidies directly through banks.