Finance Minister Nirmala Sitharaman highlighted that the Budget will bolster the 'Make in India' initiative by improving business ease, workforce development, technology adoption, and prioritising clean-tech manufacturing
Published Feb 02, 2025 | 7:00 AM ⚊ Updated Feb 02, 2025 | 7:00 AM
Nirmala Sitharaman with the budget. (Supplied)
In a major push to India’s manufacturing and industrial landscape, the Union Budget 2025-26 has announced the launch of a National Manufacturing Mission aimed at transforming small, medium, and large-scale industries.
Finance Minister Nirmala Sitharaman, presenting the Budget, emphasised that the mission will strengthen the ‘Make in India’ initiative by enhancing ease of business, workforce development, and technology adoption, while also prioritising clean-tech manufacturing.
At the heart of this mission lies the empowerment of Micro, Small, and Medium Enterprises (MSMEs), which Sitharaman described as the “second engine of development.”
India’s 5.7 crore MSMEs contribute 36 percent to manufacturing and 45 percent to exports, making them a crucial pillar of economic growth.
To accelerate their growth, the government has raised investment and turnover limits for MSME classification by 2.5 and 2 times, respectively.
The Budget also proposes a significant increase in credit availability for MSMEs, startups, and exporters.
The credit guarantee cover for micro and small enterprises has been doubled from ₹5 crore to ₹10 crore, unlocking an additional ₹1.5 lakh crore in credit over the next five years.
Similarly, startups will benefit from an enhanced credit guarantee of ₹20 crore, with moderated guarantee fees for priority sectors.
A key highlight is the introduction of customised Credit Cards for micro enterprises registered on the Udyam portal.
With a ₹5 lakh limit, these cards will be issued to 10 lakh businesses in the first year alone, improving financial accessibility for small entrepreneurs.
Recognising the need for inclusive entrepreneurship, the government will launch a new scheme to support 5 lakh first-time women, Scheduled Caste, and Scheduled Tribe entrepreneurs with term loans up to ₹2 crore.
In a bid to strengthen manufacturing across various sectors, the Budget also earmarks special initiatives for the footwear and leather industry, which is expected to generate 22 lakh jobs, and the toy industry, which aims to establish India as a global hub.
Furthermore, a National Institute of Food Technology, Entrepreneurship, and Management will be set up in Bihar under the ‘Purvodaya’ initiative to boost food processing and employment opportunities in the Eastern region.
With a strong focus on sustainability, the National Manufacturing Mission will also promote clean-tech manufacturing, covering solar PV cells, EV batteries, electrolyzers, and wind turbines.
This aligns with India’s commitment to climate-friendly industrialisation while enhancing domestic value addition and global competitiveness.
The government has announced a series of measures to strengthen domestic manufacturing, promote exports, and correct the inverted duty structure, with key changes in customs duties set to take effect from 2 February, 2025.
Building on the July 2024 Budget initiative, five National Centres of Excellence for skilling will be established, with global expertise and partnerships.
These centres will focus on equipping youth with industry-relevant skills for the “Make for India, Make for the World” manufacturing push. The collaboration will include curriculum design, training of trainers, a skills certification framework, and periodic reviews.
To integrate India’s economy into global supply chains, targeted support will be provided to develop domestic manufacturing capacities. Sectors will be identified based on objective criteria to ensure optimal growth and competitiveness.
The budget also emphasises rationalising the tariff structure and addressing duty inversion to facilitate trade and provide relief to the public.
As part of this effort, the government had earlier exempted Basic Customs Duty (BCD) on 25 critical minerals that are not available domestically and had reduced BCD on two others to support their processing, especially by MSMEs. Now, a full exemption has been extended to cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 more critical minerals, ensuring their availability for Indian manufacturers.
(Edited by Ananya Rao)
