Insights on the Union Budget 2025-26: Key Measures for MSMEs, Rural Industrialization, and Economic Growth by Dr. Vijay Kalantri, Chairman, WTC Mumbai
Dr. Vijay Kalantri, Chairman, WTC Mumbai.
“The Union Budget 2025-26 can be described as well-balanced and progressive, emphasizing growth and development by boosting consumption, rationalizing taxes, introducing compliance reforms, and promoting the ‘Make in India’ initiative. It caters to all sectors, including agriculture, manufacturing, and services by introducing 8 National Missions across these sectors, while also fostering research and innovation,” said Dr. Vijay Kalantri, Chairman, WTC Mumbai.
One of the key highlights of the budget is the enhanced access to credit for MSMEs and startups, along with technical and technological upgradation support. The increase in investment and turnover limits for MSME classification will broaden the scope of MSME schemes, improving access to credit and bringing a wider range of businesses under the micro and small enterprise categories, thereby strengthening domestic manufacturing. To further support exporter MSMEs, the credit guarantee cover for term loans has been increased to INR 20 crores. Additionally, a customized credit card with a limit of INR 5 lakh has been introduced for micro-enterprises registered under the Udyam Portal. Significant enhancements have also been made to credit cover for startups, with a moderated guarantee fee for 27 priority sectors, fostering innovation and entrepreneurship.
“The budget places a strong emphasis on rural industrialization, particularly through the expansion of logistics via India Post. This initiative is expected to drive industrial development in rural areas, helping shift the labor force from agriculture into more productive manufacturing and service sectors. Additionally, the introduction of special national missions, such as ‘Aatmanirbharta in Pulses,’ high-yielding seeds, and cotton, aims to improve crop productivity through investments in infrastructure, research and development, and export promotion” said Dr. Kalantri.
Several provisions have also been made to promote skill development and employment generation. A key focus has been placed on labor-intensive manufacturing sectors, including leather, footwear, toys, and food processing. The announcement of a National Mission for Manufacturing aims to drive growth through five key focus areas such as ease of doing business, workforce development, MSME growth, technology advancement and quality production.
Dr. Kalantri further added, “A National Mission for Exports has been introduced to strengthen India’s export ecosystem. The mission focuses on improving export credit, supporting MSMEs in overcoming non-tariff barriers, and simplifying tariff structures. The budget also rationalizes import duties and taxes across several industries, including electronics, IT, marine products, textiles, leather, and minerals. These measures are expected to significantly reduce operational costs for domestic manufacturers, thereby enhancing their global competitiveness.”
Another major reform in the budget is the enhancement of the Foreign Direct Investment (FDI) limit in the insurance sector to 100%, specifically for companies that reinvest 100% of their premium earnings. This move is expected to attract significant investments in the insurance sector while also stimulating domestic economic growth. Additionally, the budget outlines targeted investment initiatives to spur growth, including the establishment of fund of funds that focus on deep tech, artificial intelligence (AI), innovation, and electronics.
“A renewed thrust on infrastructure development has also been introduced, particularly through Public-Private Partnerships (PPP). The budget encourages state governments to adopt similar initiatives, ensuring widespread infrastructural expansion and economic advancement”, said Dr. Kalantri.
Commenting on the various reforms and measures to boost manufacturing and MSMEs, Dr. Kalantri stated, “The budget seems to have delivered on industry expectations. There has been a long-standing demand to reduce compliance costs and rationalize taxation, which has been fulfilled to a large extent. However, the execution of these policy reforms holds equal importance, and it must be ensured that these initiatives are implemented unconditionally and in the true spirit of their announcements.”
He further highlighted that the tax relief provided to the middle class is one of the significant features of the budget, as it is expected to boost consumption and stimulate economic growth in the short to medium term. Dr. Kalantri also expressed optimism about further reforms in proposed new Income Tax bill to be announced in the following week.
