M Nagaraju, Secretary of the Department of Financial Services (DFS), highlighted these changes on Monday, calling them critical for MSME expansion and global competitiveness.
Credit boost for MSMEs
The government has increased the credit guarantee under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) from ₹5 crore to ₹10 crore.
For startups, the guarantee limit has doubled from ₹10 crore to ₹20 crore, with the annual guarantee fee cut to 1% from 2% for loans in 27 focus sectors.
Well-performing exporter MSMEs can now avail of term loans up to ₹20 crore under the guarantee scheme.
Over the next five years, an additional guarantee of ₹1.5 lakh crore will be made available for enterprises seeking loans in the ₹5-₹10 crore slab.
This move is expected to increase lending to MSMEs, particularly in Tier II and Tier III cities, and improve access to export-oriented businesses, the DFS Secratary pointed out.
Revised MSME classification
The Budget has also raised the investment and turnover limits for MSMEs, allowing businesses to expand without losing government benefits.
| Category | Investment | Turnover |
|---|---|---|
| Micro Enterprises | ₹2.5 crore | ₹10 crore |
| Small Enterprises | ₹25 crore | ₹100 crore |
| Medium Enterprises | ₹125 crore | ₹500 crore |
With investment and turnover limits increasing by 2.5 times and 2 times, respectively, MSMEs will have greater flexibility to scale operations.
According to Nagaraju, the move is expected to increase participation in government schemes like market support, export promotion, and public sector procurement while preventing growth stagnation due to restrictive classification limits.
Customised credit card for Micro Enterprises
A new customised credit card scheme has been introduced for Micro Enterprises, offering a credit limit of up to ₹5 lakh per card. The card is designed to provide easier and faster access to funds for working capital needs, without requiring extensive financial documentation or collateral.
The facility operates on a revolving credit basis, valid for one year and renewable based on performance. The credit assessment will be digitally processed, factoring in turnover data from UPI transactions, bank statements, and the Account Aggregator framework. The entire process, from sanction to disbursement, will be conducted digitally.
Government estimates suggest that the scheme could inject between ₹25,000 crore and ₹30,000 crore in additional credit into the Micro Enterprise segment, improving liquidity and operational efficiency for smaller businesses, he added.
