The Union Budget for 2025-26 is likely to step up financial support for startups and small businesses that account for nearly a third of the nation’s economic output.
The central government is looking to ensure they get adequate working capital, trade finance and funds needed for growth at attractive terms, according to two persons informed about the discussions. Likely measures include enhanced financial support under the schemes run by the Department of Promotion of Industry and Internal Trade (DPIIT) and the ministry of Micro, Small and Medium Enterprises (MSME), they said on the condition of anonymity.
Easier access to credit has been a key demand of MSMEs as central bank’s Monetary Policy Committee has increased rates by 250 basis points since May 2022, increasing the cost of capital. Small businesses, contributing over 29% of India’s gross domestic product, employ more than 247 million people, making the sector the largest employer when India is struggling to create adequate employment for millions of people joining the workforce every year.