back Back

Budget 2025: Indian MSMEs get $17m credit boost; experts call it game-changer

By Gloria Methri

February 03, 2025

  • Bharat Trade Net
  • Budget 2025
  • Budget 2025 for SMEs
Share

Budget 2025, MSMEs, Financial Inclusion, SME Lending, Digital Banking, Regulatory, Compliance, FinTech, IndiaAimed at strengthening credit access and fostering small business growth, Union Finance Minister Nirmala Sitharaman unveiled a series of MSME-focused measures in her 2025 Budget speech. With over 5.7 crore MSMEs contributing 36% to manufacturing and 45% to exports, the latest budget provisions seek to enhance financial accessibility, digital trade infrastructure, and sectoral competitiveness.

MSME Budget 2025: Key Allocations and Reforms

  • Credit Guarantee Expansion: The credit guarantee cover for MSMEs has been doubled from ₹5 crore to ₹10 crore, unlocking an additional ₹1.5 lakh crore in credit over the next five years.
  • Startup Support: The credit guarantee limit for startups has been increased to ₹20 crore, with a moderated guarantee fee of 1% for loans in 27 key sectors.
  • MSME Classification Update: Investment limits for MSME classification have been raised by 2.5 times, enabling businesses to scale while retaining their MSME status.
  • Technology & Trade Infrastructure: A ₹25,000 crore corpus has been set aside for shipbuilding, ₹500 crore has been allocated to the MRO sector, and Bharat Trade Net (BTN) has been introduced to streamline trade facilitation.
  • Financial Inclusion Initiatives: Customised credit cards with a ₹5 lakh limit for micro-enterprises on the Odium portal, alongside UPI-linked credit cards under the revamped PM Swanidhi scheme.

Industry Applauds Credit Access & Growth Initiatives

Experts believe these measures will provide much-needed liquidity to MSMEs, enabling expansion and innovation. Jitendra Tanwar, MD & CEO of Namdev Finvest Pvt Ltd, emphasised that doubling the credit guarantee cover is a game-changer, stating, “This move addresses long-standing funding constraints, allowing MSMEs to scale operations and invest in modernisation.”

Startups, too, are poised to gain from extended credit support and an expanded Fund of Funds (FoF). Amey Belorkar, Fund Manager at IDBI Capital Markets & Securities Limited, highlighted that the increase in the FoF for MSMEs to ₹10,000 crore, along with the introduction of a Deep Tech FoF, “will significantly strengthen India’s innovation ecosystem.”

Digital & Trade Reforms to Aid MSME Competitiveness

The launch of Bharat Trade Net (BTN) is expected to simplify trade documentation and financing, improving MSME export competitiveness. Manish Gadia, CEO of Vayana TradeXchange, noted that “simplified cargo screening, customs clearance, and reduced trade barriers will ensure Indian businesses integrate more seamlessly into global supply chains.”

Additionally, the push for a centralised KYC system is a major step toward regulatory transparency. Akash Sinha, CEO & Co-founder of Cashfree Payments, remarked, “A revamped central KYC system will enhance trust in the financial ecosystem, making cross-border financing and compliance processes more efficient for MSMEs.”

The Union Budget 2025 places MSMEs at the heart of India’s economic expansion strategy. Enhanced financial accessibility, digital infrastructure improvements, and streamlined regulations are expected to drive growth and resilience in the sector.

Jairam Sridharan, MD of Piramal Finance, summed up the sentiment, stating, “This Budget is an invitation for private consumption and the MSME sector to take the lead in economic growth. A prudent borrowing plan and fiscal discipline create space for monetary policy shifts that could further boost business expansion.”

With these reforms, MSMEs are poised to play a defining role in India’s journey towards becoming a global manufacturing and trade powerhouse. The coming months will reveal how businesses adapt and leverage these opportunities in an evolving economic landscape.

Previous Article

February 03, 2025

The Monday Roundup: what we are watching this week | Feb 3rd

Read More
Next Article

February 03, 2025

Euroclear partners with Microsoft to harness cloud, data & AI

Read More






IBSi FinTech Journal

  • Most trusted FinTech journal since 1991
  • Digital monthly issue
  • 60+ pages of research, analysis, interviews, opinions, and rankings
  • Global coverage
Subscribe Now

Other Related News

Today

Galoy unveils Lana to offer Bitcoin-backed lending for banks

Read More

February 04, 2025

Veefin Group acquires UAE-based TradeAssets to expand its offerings

Read More

February 03, 2025

J.P. Morgan backs Saudi’s Lendo with $690m to drive SME growth

Read More

Related Reports

Sales League Table Report 2024
Know More
Global Digital Banking Vendor & Landscape Report Q4 2024
Know More
NextGen WealthTech: The Trends To Shape The Future Q4 2023
Know More
IBSi Spectrum Report: Supply Chain Finance Platforms Q4 2023
Know More
Treasury & Capital Markets Systems Report Q4 2024
Know More