Decoding the Union Budget 2025-26

A detailed dive-in into the major takeaways for MSMEs this year

At Tide, we know that every budget announcement brings a mix of excitement and uncertainty for small business owners like you. What new opportunities does it unlock? How will policy changes impact your daily operations? More importantly, how can you make the most of the benefits introduced?

The Union Budget 2025 has introduced several measures aimed at supporting MSMEs—ranging from tax reliefs and easier credit access to incentives for digital adoption and business growth. But we understand that decoding the fine print can be overwhelming. So here we are, to simplify it for you. In this blog, we’ll break down the key takeaways, explain what they mean for your business, and help you navigate the changes with confidence.

Before diving into the specifics of the Union Budget, it’s essential to understand the critical role that MSMEs like yours play in India’s economy.

Recognising MSMEs as the 2nd Engine of Economy, the government has intensified its efforts to strengthen the sector by introducing significant measures in the Budget aimed at enhancing growth, innovation, and competitiveness.

Let’s dive into the key announcements made in the Budget for MSMEs:

1. Increased Investment and Turnover Limits

   One of the most significant changes introduced in this budget is the substantial increase in investment and turnover limits for MSME classification. Previously, these limits were often seen as restrictive, preventing many growing businesses from qualifying for MSME status. The revised thresholds will allow a greater number of enterprises to benefit from government schemes designed specifically for this segment. The revised thresholds are as follows:

   Enterprise Type	Old Turnover Limit	New Turnover Limit	Old Investment Limit	New Investment Limit
   Micro	₹5 Crore	₹10 Crore	₹1 Crore	₹2.5 Crore
   Small	₹50 Crore	₹100 Crore	₹10 Crore	₹25 Crore
   Medium	₹250 Crore	₹500 Crore	₹50 Crore	₹125 Crore

   This change is particularly important as it allows more businesses to qualify as MSMEs thereby granting businesses access to various government schemes designed specifically for you.

2. Enhanced Credit Guarantee Scheme

   

   Access to finance has long been a significant hurdle for many MSMEs. To address this issue, the budget proposes an expansion of the credit guarantee scheme. This initiative has doubled the credit guarantee cover for MSMEs.

   • For micro and small enterprises, the credit guarantee cover has been raised from ₹5 crore to ₹10 crore, enabling an additional ₹1.5 lakh crore in credit over the next five years.
   • Similarly, for startups, the credit guarantee has doubled from ₹10 crore to ₹20 crore, with a reduced loan fee of just 1% for loans in 27 priority sectors essential for Atmanirbhar Bharat.
   • Export-oriented MSMEs will benefit from term loans up to ₹20 crore, facilitating their growth in international markets.

   By offering a safety net that guarantees repayment up to a certain limit, banks and financial institutions will be more inclined to extend credit to MSMEs that may not have substantial collateral or credit history. This move is expected to facilitate easier access to loans, enabling enterprises like yours to invest in expansion, technology upgrades and workforce development.

3. Financial Support for First-Time Entrepreneurs

   

   Recognising that financial barriers can hinder entrepreneurship, the government has introduced a new scheme aimed at providing financial assistance to first-time entrepreneurs from disadvantaged backgrounds. This scheme is:

   • Designed to empower individuals who may face challenges in accessing capital due to lack of resources or support networks.
   • Targets 5 lakh women, Scheduled Castes (SC), and Scheduled Tribes (ST) first-time entrepreneurs.
   • Will provide term loans of up to ₹2 crore over the next five years.
   • Incorporates lessons from the successful Stand-Up India initiative and includes online capacity building programmes focusing on entrepreneurship and managerial skills.
4. Sector-Specific Productivity Initiatives

   

   The budget is designed to enhance productivity in key sectors such as footwear, leather, textiles and toy manufacturing. These industries provide employment and hold significant potential for export growth.The government aims to boost efficiency and competitiveness at home and abroad by targeting key sectors with tailored support.

   • Footwear and Leather: The government has introduced a new Focus Product Scheme which aims to generate 22 lakh new jobs and achieve a turnover of ₹4 lakh crore while also facilitating exports exceeding ₹1.1 lakh crore. If you run a small business in leather goods or footwear, this could mean increased demand, more opportunities for partnerships with larger manufacturers, and potential government support for expanding your business.
   • Textiles: The Textiles Ministry’s budget has been increased by 19%, reaching ₹5,272 crore in FY26. A major portion — ₹1,948 crore — is dedicated to research and capacity building, nearly three times higher than last year. For small-scale textile businesses, this could mean better access to skill development programmes, innovative raw materials and government-backed growth initiatives that make your products more competitive.
   • Toy Manufacturing: Similarly, a new government scheme aims to position India as a global toy manufacturing hub by supporting clusters, skill development, and sustainable production. If you’re a small business that manufactures toys, this could mean access to new resources, funding, and expansion opportunities in newer markets (exports or internationalisation), especially as Indian-made toys gain prominence.

   As a Tide member, you can explore how these policies align with your growth plans, whether through leveraging financial support, expanding product lines, or tapping into export opportunities.

5. Emphasis on Innovation and Technology

   

   The government is heavily investing heavily in research, innovation, and new technologies, ensuring that MSMEs remain competitive in an evolving global market. Here’s what’s in it for you:

   • ₹10,000 crore Fund of Funds – If you’re a startup or scaling business, this fund could provide crucial financial support to help you innovate and expand.
   • Research Grants for MSMEs – If you’re working on product improvement or new solutions, you may be able to partner with academic institutions and benefit from government-backed research funding.
   • Technology Incubators – These hubs will offer mentorship, resources, and funding opportunities to help small businesses like yours to develop innovative products and compete more effectively.

   For Tide members, these initiatives could mean easier access to funding, better opportunities for collaboration, and improved resources to scale your business.

6. Strengthening Export Capabilities

   

   With MSMEs contributing nearly half of India’s total exports, the government is introducing key measures to help small businesses expand globally. If you’re a Tide member looking to grow your business through exports, here’s how these initiatives could support you:

   • Market Access Programmes: The government will launch initiatives to help MSMEs participate in international trade fairs and exhibitions, allowing you to showcase your products to global buyers and distributors.
   • Export Credit Facilitation: Getting paid for international sales can be risky, but enhanced export credit insurance support will make it easier for MSMEs to secure financing and manage risks when dealing with overseas clients.
   • Favourable Trade Agreements: The government is working on new trade deals that will simplify market entry and regulatory processes, making it easier for Indian small businesses to expand internationally.

   For Tide members, this means greater exposure to global markets, financial support for exports, and reduced barriers to international trade. If you are a business owner thinking about scaling your business beyond India, now would be the right time to explore export opportunities.

Conclusion:

The Union Budget 2024-25 brings valuable support for MSMEs like yours, with initiatives to drive growth, enhance competitiveness, and build a strong foundation for long-term success. The real impact depends on how businesses like yours seize these opportunities.

At Tide, we encourage you to stay ahead by embracing innovation, boosting productivity, and leveraging the resources now available. The future looks bright, and we’re excited to see how these changes empower small businesses across India.

With the right strategy and support, your business can thrive in an ever changing world.