The enhancements in definition of MSME, upto Rs125 crore of investment in plant and machinery and an annual turnover of Rs500 crores, will provide much-needed support to MSMEs
Sundeep Mohindru, Founder and Promoter, M1xchange
FinTech BizNews Service
Mumbai, February 1, 2025: Union Minister of Finance and Corporate Affairs, Smt Nirmala Sitharaman presented the historic union budget for the FY2025-26 in the Parliament today. Sundeep Mohindru, Founder and Promoter, M1xchange and Shantanu Bairagi, CEO - Veefin Capital, provide the exclusive insights on how the entire MSME segment stands to gain extra-ordinarily through various proposals in the budget:
Sundeep Mohindru, Founder and Promoter, M1xchange
"The Union Budget 2025 has given much-needed attention to MSMEs, recognizing them as the key driver of India's economy and global competitiveness. The enhancements in definition of MSME, upto Rs125 crore of investment in plant and machinery and an annual turnover of Rs500 crores, will provide much-needed support to MSMEs in scaling operations, embracing new technologies, and accessing capital more efficiently. With new definition the benefit of TReDS will expand to larger set of enterprises for facility of early realisation of their dues from customers, who were earlier deprived of this benefit.
Credit guarantee cover
Expanding the credit guarantee cover and introducing customized credit cards for micro-enterprises will inject much-needed capital liquidity into the MSME sector, allowing businesses to invest in growth and innovation. Further, set up of Bharat Trade Net portal will digitalise the documentation flow of cross border business and enhance possibility of cross border finance for MSME exporters in big way on ITFS (International Trade Finance System) platform.
The next level initiative by government to decriminalise 100 more provisions under various Acts will give confidence to businesses to invest more and experience the ease of doing business. Additionally, the Manufacturing Mission’s emphasis on workforce development, and technology adoption will further strengthen India’s position as a global manufacturing powerhouse. Especially, with global companies increasingly looking to India as a preferred business destination, these measures will not only improve MSME productivity and competitiveness but also accelerate the ‘Make in India’ vision, helping position India as a dominant player in the global supply chain."
Shantanu Bairagi, CEO - Veefin Capital
“The role of MSMEs in the journey towards Viksit Bharat has been called out clearly by the Finance Minister and commensurate to that are some of the fiscal and policy measures announced in the budget to boost the backbone of the economy.
Credit & MSME
Availability of credit access, simplification of CKYC and enhancement of credit guarantee covers for MSMEs, startups and exporters stand out as key fiscal support measures from the Government of India. A big increase in Udyam registrations, which is an indicator of extent of formalization of small and medium businesses, is expected with customized credit cards with INR 5L limit being introduced for registered businesses. With the government expecting to give 10 Lakh credit cards in a year, this is going to be yet another measure to incentivize MSME businesses to formalize and have faster access to working capital. The enhancement in the investment and turnover limits for classification of all MSMEs will be enhanced to 2.5 and 2 times respectively will spur widespread adoption of digitization among small businesses and bring them on par in terms of access to commerce and capital.
The Manufacturing Mission to furthering Make in India and Make for the World by improving ease of doing business, create a vibrant MSME ecosystem and improve availability of technology will enhance the credit worthiness of small and medium sized and boost the confidence of financial institutions in doubling up their efforts to lend to MSME. The Economic Survey has already indicated how banks credit to MSMEs has grown 13% y-o-y. Some of the measures announced in the budget will further boost credit for the MSME ecosystem.
DPI
India’s steadfast approach to being recognized as an example in building digital public infrastructure got yet another boost with the announcement of ‘BharatTradeNet’ (BTN) for international trade - a unified platform for trade documentation and financing solutions.”
