What The MSME Industry Expects from Union Budget 2025 With the nation's ambition to reach a $5 trillion economy and achieve the long-term vision of Viksit Bharat by 2047, the government's budgetary priorities will play a crucial role in shaping the country's economic trajectory.
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As India gears up for the Union Budget 2025, stakeholders across industries are keenly anticipating policies that will fuel economic growth and strengthen key sectors, specially MSMEs. With the nation's ambition to reach a $5 trillion economy and achieve the long-term vision of Viksit Bharat by 2047, the government's budgetary priorities will play a crucial role in shaping the country's economic trajectory.
A strong focus on the micro borrowers, MSME, and SME sectors is essential for sustained economic progress of the country. Santanu Agarwal, deputy MD of Paisalo Digital Limited, emphasizes the need for continued liquidity support to banking and non-banking financial institutions (NBFCs) to bolster the competitiveness of these businesses. "A key measure would be maintaining or increasing liquidity across banking and non-banking financial institutions. This step will enhance the competitiveness of Indian micro borrowers, MSMEs, and SMEs, allowing them to thrive both domestically and globally," he said.
Furthermore, he also advocates for skill development and employment generation programs that must be prioritized to address workforce needs. Infrastructure investments are equally crucial to strengthening manufacturing and service value chains.
Financial support for MSMEs
Nishith Maheshwari, head of digital business loans at InCred Finance, underscores the importance of technological adoption and compliance simplifications. "The MSME sector, the backbone of India's economy, requires a strong push toward innovation and technological adoption. Simplifying interstate and export logistics compliance is critical to enabling seamless commerce," he states.
He also suggests that expanding the scope of credit guarantee schemes will improve funding access for startups and export-oriented MSMEs. Moreover, extending tax benefits to establishments providing public EV charging stations can accelerate the transition toward electric mobility.
Another key aspect is tax and compliance reform. Maheshwari stresses that reducing operational complexities for MSMEs will enhance their scalability, ensuring their seamless integration into the formal economy.
Ajay Pareek, chief business officer at SMFG India Credit, highlights the role of MSMEs and NBFCs in driving economic growth. "As India moves towards its twin goals of a $5 trillion economy and Viksit Bharat by 2047, MSMEs and NBFCs will play a crucial role in facilitating these objectives."
He advocates for an exclusive liquidity window tailored for companies financing MSMEs and microfinance schemes. Additionally, green financing presents a significant opportunity for NBFCs to support sustainable projects, thus fostering entrepreneurial expansion.
Tax reforms, particularly regarding TDS deductions for NBFCs, also remain a pressing concern. "NBFCs are subject to 10 per cent TDS on interest payments, addressing this issue could boost credit availability and increase access to affordable funds, which is critical to propel economic activity and help India achieve sustainable growth," he explains.
A reformed GST framework could also be a game-changer for MSMEs. Jayesh Patel, founder & CEO of Lead Reclaim and Rubber Products Ltd, highlights the benefits of a simplified GST structure. "By reducing compliance costs and improving cash flow through faster refunds, businesses can reinvest in operations and expansion," he notes.
Patel emphasizes that a more efficient GST system will encourage compliance, allowing MSMEs to integrate more seamlessly into formal supply chains and enhance their competitiveness in both domestic and global markets.
With the Union Budget 2025 on the horizon, policymakers have a unique opportunity to introduce reforms that strengthen MSMEs, paving the way for a resilient and dynamic economy that aligns with India's long-term economic ambitions.
