The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1, 2025, aims to bolster India’s Micro, Small, and Medium Enterprises (MSMEs) and strengthen the manufacturing sector. Emphasizing credit support, the budget introduces several measures to revitalize the sector, regarded as the backbone of India’s economy, contributing nearly 30% to GDP and 45% to exports.
The Federation of Chambers of Industries Kashmir (FCIK) expressed positive sentiments about the budget, noting its substantial provisions aimed at enhancing the MSME ecosystem. The organization underscored the importance of swift implementation to realize the benefits of enhanced credit guarantee coverage, which has been increased to ₹10 crore, and of various credit schemes aimed at promoting entrepreneurial ventures.
"We welcome this budget focused on long-term sustained economic growth," stated Shailesh Chandra, President of the Society of Indian Automobile Manufacturers (SIAM). He pointed to specific provisions focused on rural prosperity and the promotion of clean technology manufacturing as catalysts for elevated demand within the automotive sector.
Ravi Prem, President of the Indian Commercial Transport Management Association (ICTMA), also lauded the budget, highlighting its support for startups with the establishment of the ₹10,000 crore Fund of Funds. He remarked, "The government’s continued emphasis on startups and MSMEs reinforces India’s position as a global hub for high-value employment and technological advancements." These sentiments reflect the collective expectation for these initiatives to stimulate growth among small enterprises.
The National Manufacturing Mission, aimed at enhancing the competitiveness of the manufacturing sector, is another significant highlight. Rajesh Shah, Chairman of Euro Panel Products Limited, articulated, "The introduction of the National Manufacturing Mission will provide policy support to various industries," reinforcing India’s commitment to becoming a global manufacturing leader.
Infrastructure development plays a pivotal role as well. The budget allocates ₹1.5 lakh crore for infrastructure improvements and interest-free loans aimed at enhancing logistics. Nikhil Mansukhani, Managing Director of Man Industries Ltd., remarked, "The ₹1.5 lakh crore interest-free loan for infrastructure and PPP projects will improve logistics, reduce bottlenecks, and boost multimodal connectivity, which is particularly beneficial for heavy industries, steel, and oil & gas."
One of the innovative moves introduced is Bharat Trade Net, aimed at providing unified trade financing through digital channels. This initiative could dramatically increase access to financial support for MSMEs if executed effectively. Experts posit, "The introduction of Bharat Trade Net could be the most transformative initiative for India's trade financing ecosystem," significantly integrating exporters, banks, and government bodies.
Despite the optimism surrounding these budgetary measures, concerns about their implementation persist. MSMEs continue to face high borrowing costs, long payment cycles, and bureaucratic hurdles. Industry representatives assert the need for improved financial accessibility as well as targeted support mechanisms to truly thrive. Sanjay Budhia, Chairman of the CII National Committee on EXIM, urged for the extension of the interest equalisation scheme to help exporters remain competitive globally.
Concerns have also been raised about the adequacy of support for regions like Jammu and Kashmir and Andhra Pradesh, where many MSMEs experience significant economic challenges. Dr. V Muralikrishna, Chairman of AP CII, expressed disappointment over the lack of specific initiatives for Andhra Pradesh, emphasizing the need for measures directly addressing local industry needs.
Overall, the Union Budget 2025-26 introduces several promising measures aimed at fostering growth within the MSME sector and enhancing the manufacturing framework. Commentators agree, though, on the centrality of effective enforcement and follow-through to convert these policies from theoretical ideals to real economic impact. Venkatesh Mudragalla, Co-founder of Jeh Aerospace, stated, "For these measures to translate to actual benefits, there must be rigorous execution and coordination among all stakeholders."
The path forward will require continuous governmental support, innovation at all levels, and active engagement with the MSME community to refine these measures according to their specific needs. With these implementations, India could decisively bolster its position as a global manufacturing powerhouse.