Budget 2025: Financial support can be increased for small businesses and startups for the Union Budget 2025-26. These businesses contribute almost one-third of the country’s GDP.
What new facilities can be provided?
The government is preparing to provide the necessary funds for working capital, trade finance and growth to small businesses and startups on easy and cheap terms. There is a possibility of increasing financial support through the schemes of DPIIT and MSME ministry.
Need for credit
MSMEs have a big demand for easy credit. The cost of capital has increased due to the changes in RBI’s monetary policy from 2022 till now. This need is even more important for the MSME sector, which contributes 29% of GDP and employs approximately 247 million people.
MSME Ministry’s Budget and Schemes
The budget of the MSME ministry in FY25 is ₹22,138 crore. They have some flagship schemes:
1. Guaranteed Emergency Credit Line (GECL): A scheme that provides full guarantee of loans to small businesses during Covid.
2. Prime Minister Employment Generation Programme: It helps to start micro-enterprises in the non-farm sector.
What do Fintech Experts say?
EasyPay founder Nilay Patel says that timely and affordable capital is very important for MSMEs and early-stage startups. If new credit guarantee schemes become flexible, it will be easier for startups to get funding and new employment opportunities will be created.
DPIIT’s Fund of Funds Scheme
DPIIT’s target is to establish startups in every district by 2025. So far, 48% of new startups are coming from tier II and tier III cities. Support of ₹19,992 crore has been given so far under the Fund of Funds scheme. This scheme is being run through SIDBI and was started in 2016.
New Ideas: Use of Intangible Assets
The government is also exploring ways that startups can take loans from banks and financial institutions by using their intangible assets such as patents, trademarks, copyrights and trade secrets as collateral.
Seed Fund Scheme and Backward Areas Development
The DPIIT seed fund scheme helps in prototype development and market entry of startups. Apart from this, there are also schemes for industrial development in backward and remote areas.
Employment Potential of Startup Ecosystem
Supporting the startup ecosystem is very important for employment potential. PM Narendra Modi had said that startup culture is a social trend which no one can stop.
Expectation from New Budget
Small businesses and startups are expected to get more support through this new budget, which can be a game-changer for the country’s economic growth and employment generation.
