In the Union Budget 2025-26, Finance Minister Nirmala Sitharaman announced significant changes to the classification criteria for Micro, Small, and Medium Enterprises (MSMEs) in India. These revisions aim to facilitate the expansion and competitiveness of these enterprises by allowing them to scale without losing the benefits associated with MSME status.
Revised Classification Criteria:
The government has raised both investment and turnover thresholds for MSMEs. While the exact figures were not detailed in the available sources, the modifications are designed to enable businesses to grow and achieve economies of scale without forfeiting access to government incentives. m.economictimes.com
Enhanced Credit Support:
To further bolster the MSME sector, the budget proposes a significant enhancement in credit guarantee cover. The guarantee cover for MSMEs has been increased from ₹5 crore to ₹10 crore, providing greater financial support and facilitating their growth. pib.gov.in
Implications for MSMEs:
These changes are expected to foster growth and formalization within the MSME sector. By allowing enterprises more room to scale without losing MSME benefits, businesses can enhance productivity and competitiveness. The revised thresholds and increased credit guarantee cover are anticipated to strengthen MSMEs by providing more financial support and facilitating their growth. m.economictimes.com
Overall, the budget’s focus on revising MSME classification criteria and enhancing credit availability underscores the government’s commitment to supporting the expansion and competitiveness of small and medium enterprises in India.
The Govt has boldly revised the MSME classification criteria, and much larger companies will now benefit from policies run only for micro, small and medium enterprises.
Micro – Investment limit has skyrocketed from Rs 1 crore to Rs 2.5 crore, and the turnover limit from Rs 5 crore to Rs 10 crore
Small – Investment limit of Rs 25 crore, up from Rs 10 crore, and their turnover can reach Rs 100 crore, up from Rs 50 crore
Medium – Investment limit leap to Rs 50 crore from Rs 20 crore, and turnover to Rs 500 crore from Rs 250 crore
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