In her seventh budget address and the first Union Budget of the new NDA government, Finance Minister Nirmala Sitharaman announced a range of measures aimed at bolstering the micro, small, and medium enterprise (MSME) sector.
Sitharaman emphasized the government’s commitment to MSMEs and labour-intensive manufacturing, detailing a strategic package designed to provide substantial financial and technological support to these businesses.
Key initiatives include:
- Credit Guarantee Scheme: The introduction of a new credit guarantee scheme will facilitate term loans for machinery without requiring collateral or third-party guarantees. A dedicated self-financing guarantee fund will cover up to ₹100 crore per borrower, with the loan amount potentially surpassing this limit.
- Updated MSME Credit Assessment: A revised credit assessment model for MSMEs by public sector banks will focus on digital footprints rather than traditional asset and turnover metrics. This aims to better reflect the financial health of MSMEs.
- Credit Support Mechanism: A new mechanism will provide credit support to MSMEs during periods of financial stress, preventing these businesses from falling into non-performing asset (NPA) status.
- Increased Mudra Loan Limit: The Mudra loan limit will be raised to ₹20 lakh from the current ₹10 lakh for borrowers who have successfully repaid previous loans under the Tarun category.
- Expansion of SIDBI Branches: The government plans to establish 24 new SIDBI branches in MSME clusters over the next three years, broadening credit access to 168 clusters.
- E-Commerce Export Hubs: New e-commerce export hubs will be set up in a public-private partnership (PPP) model. These hubs will offer a streamlined regulatory framework to help MSMEs and traditional artisans access international markets.
- Lower TReDS Onboarding Threshold: The turnover threshold for mandatory onboarding on the Trade Receivables Discounting System (TReDS) platform will be reduced from ₹500 crore to ₹250 crore, enhancing financing options for MSMEs.
These measures are expected to drive growth and resilience in the MSME sector, supporting its development and sustainability amid economic challenges.
