Finance Minister Nirmala Sitharaman announced several significant changes for the micro, small, and medium enterprises (MSMEs) sector in the Union Budget 2025 presentation. This includes customised credit cards with a limit of Rs 5 lakh, increased credit guarantee cover and a term loan of up to Rs 20 crore for well-run export-oriented MSMEs. This move aims to boost manufacturing in the country and improve credit access for MSMEs. To stay updated on the latest business news and stock market updates, check out Zee Business and subscribe to their YouTube channel.
MSMEs Receive a Boost in Union Budget 2025: A Comprehensive Overview
Introduction
Micro, small, and medium enterprises (MSMEs) are the backbone of the Indian economy, contributing significantly to employment and GDP. To further support this vital sector, Finance Minister Nirmala Sitharaman announced several key initiatives in the Union Budget 2025 presentation.
Key Changes for MSMEs
1. Customized Credit Cards
MSMEs will now have access to customized credit cards with a limit of Rs 5 lakh. These cards will offer tailored benefits and rewards, enabling MSMEs to manage their finances more effectively.
2. Increased Credit Guarantee Cover
The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) has increased its guarantee cover limit from Rs 2 crore to Rs 5 crore. This will allow MSMEs to secure larger loans at more favorable terms.
3. Term Loan for Export-Oriented MSMEs
Well-run export-oriented MSMEs can now avail term loans of up to Rs 20 crore. This initiative aims to boost manufacturing and enhance India's export competitiveness.
4. Interest Subvention for Exporters
Exporters will receive an interest subvention of 2% on pre- and post-shipment credit. This will reduce their borrowing costs and enhance their profitability.
5. TReDS Platform for Invoice Discounting
MSMEs can now access Trade Receivables Discounting System (TReDS) platform to discount their invoices and improve their cash flow.
Background
MSMEs have traditionally faced challenges in accessing finance, which has hindered their growth. The government has recognized the need to address this issue and has implemented various measures over the years to support MSMEs. These include:
Top 5 FAQs
1. What is the definition of an MSME?
As per the MSME Development Act, 2006, MSMEs are classified as:
2. What are the benefits of being registered as an MSME?
Registration as an MSME provides access to various government schemes, incentives, and support services, including:
3. How can MSMEs apply for customized credit cards?
MSMEs can apply for customized credit cards through participating banks. They should fulfill the eligibility criteria and submit the required documents.
4. What is the interest rate on term loans for export-oriented MSMEs?
The interest rate on term loans for export-oriented MSMEs will be determined by the lending institution. However, it is expected to be lower than the market rates.
5. How can MSMEs access TReDS platform?
MSMEs can register on the TReDS platform and connect with banks and NBFCs to discount their invoices.
Conclusion
The Union Budget 2025's initiatives for MSMEs are a welcome boost to the sector. These measures aim to enhance credit access, reduce borrowing costs, and improve cash flow. By supporting MSMEs, the government is paving the way for economic growth and job creation.
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