Neil Banerjee
The Union Budget 2025 has become a focal point of discussions, especially among Indian SMEs (Small and Medium Enterprises) and MSMEs (Micro, Small, and Medium Enterprises), which collectively build up the backbone of the nation’s economy. With their significant contributions to GDP, employment, and innovation, this budget is expected to introduce critical measures that can drive growth, sustainability, and competitiveness in these sectors.
Strengthening credit access and financial inclusion
One of the most pressing needs for SMEs and MSMEs is access to affordable and timely credit. Bhavik Vasa, Founder of GetVantage and MD of GetGrowth Capital, highlights the progress made in recent years with measures like the enhanced ₹9,000 crore Credit Guarantee Scheme corpus.
“This initiative has facilitated easier access to credit for over 1.5 crore MSMEs, reducing borrowing costs and boosting liquidity,” he said. He further suggests leveraging Digital Public Infrastructure (DPI) innovations like the Open Credit Enablement Network (OCEN) to democratise access to capital further.
Ratish Pandey, Business Coach and Founder of Ethique Advisory, echoes this sentiment. “Measures to improve access to credit will be essential in enabling SME growth and survival in a volatile economy. Cash-flow-based financing and embedded finance solutions are expected to gain traction, enabling businesses to secure growth capital without ownership dilution,” said Pandey.
Vasa further underscored the transformative role of digital infrastructure in empowering SMEs. “The government’s commitment to MSME growth through the enhanced Credit Guarantee Scheme corpus is commendable. Digital Public Infrastructure, like the Unified Logistics Interface (ULI) and Open Credit Enablement Network (OCEN), is streamlining credit access and democratising capital. However, cash-flow-based financing, simplified compliance, and incentives for sustainable practices are crucial to aligning MSMEs with global ESG standards,” he stated.
Dinesh Gulati, COO, IndiaMART InterMESH Limited, underlines the need for a self-financing guarantee fund for the MSMEs. He says, “Pooling credit risks for MSMEs through a self-financing guarantee fund will positively impact the sector by enhancing access to finance, enabling larger loans without collateral, promoting financial stability, and encouraging growth.”
Support for manufacturing and innovation
Transitioning from financial inclusion, the focus shifts to policies that can bolster domestic manufacturing and innovation.
Radhika Koolwal, Co-Founder of an SME, Urban Space Home Decor, shared her vision for policies incentivising domestic manufacturing by offering sops. “Subsidies on raw materials and machinery are vital. For instance, a reduction in GST rates on home furnishings could enhance affordability for the middle class. Sustainable practices deserve special attention. Tax benefits for eco-friendly production and support for e-commerce platforms can empower businesses like ours to reach underserved markets and compete globally,” she emphasised. This underscores the importance of export incentives in positioning Indian brands on the international stage.
Similarly, the food processing sector has pinned high hopes on the upcoming budget. Pankaj Prakash Sharma, Founder and CEO of Happa Foods, pointed out the growing demand for organic and nutritious products. “We anticipate policies fostering innovation, investing in agricultural infrastructure, and enhancing the farm-to-fork supply chain. Simplifying GST structures and improving export opportunities can elevate this sector as a cornerstone of economic growth,” he said. These measures can ensure that SMEs in this space continue to thrive while aligning with the government’s vision of Atmanirbhar Bharat.
Driving sustainability and compliance
Building on the discussions around innovation, the need for sustainable practices has emerged as a priority. Smitha Shetty, APAC Regional Director at Achilles Information Ltd, strongly advocated for integrating sustainability into the economic framework.
“Easier access to green financing, tax benefits for eco-friendly investments, and a Green Credit and Carbon Market framework can drive the adoption of renewable energy and waste reduction technologies,” she remarked. She also highlighted supply chain transparency as a key enabler for achieving India’s Net Zero 2070 vision.
“Practical policies can empower businesses to transition toward sustainability seamlessly,” she added, reiterating the need for long-term strategies to address environmental challenges.
In the recycling industry, Abhay Deshpande, Founder and CEO of Recykal, emphasised the importance of developing domestic recycling infrastructure. “Support for advanced recycling technologies, GST exemptions for recycling machinery, and incentives to recover critical minerals are essential steps for fostering a circular economy and reducing import dependency,” he explained. Such measures can align with India’s clean energy transition goals while boosting economic and environmental resilience.
Also Read: What experts want on taxation front from Union Budget
Strategic reforms and sectoral insights
While sustainability sets the stage for future-focused growth, strategic reforms are crucial for immediate economic resilience. The cryptocurrency and fintech industries, for example, are particularly keen on regulatory clarity.
Sathvik Vishwanath, CEO and Founder of Unocoin, suggested that the creation of a dedicated cryptocurrency regulatory body could provide clearer oversight and enhance investor confidence.
“The 2025 Union Budget is expected to address key sectors, including cryptocurrencies, fintech, and electric vehicles. Middle-class tax relief, lower excise duties, and increased capital spending on infrastructure are other vital areas that could indirectly benefit SMEs by boosting demand and reducing operational costs,” he highlighted.
Addressing economic challenges
Economic resilience remains a core concern for SMEs. Ratish Pandey, explained, “Access to affordable credit, skill development initiatives, and tax breaks for manufacturing are crucial for SMEs’ resilience. Structural support for exporters and GST streamlining can further enhance their competitiveness.” This underlines the necessity of targeted policies in addressing these challenges and fostering sectoral recovery and growth.
“There is a need to simplify the tax structure, create more transparency that will help reduced compliance processes and cost involved for MSMEs,” said Gulati.
The D2C (direct-to-consumer) sector also pointed out the hurdles it faces while grappling to bring about economic resilience. Chandan Singh Ghugtyal, Founder and CEO of DAAKit Technologies, highlighted the complexities of GST compliance. “The GSTN registration process is unnecessarily cumbersome, hindering brand scalability. A centralised checklist for compliance would unlock the true potential of the D2C ecosystem,” he asserted, emphasising the critical role of policy reforms in fostering growth and innovation.
Looking ahead
The Union Budget 2025 presents an opportunity to redefine India’s SME and MSME landscape by addressing critical bottlenecks and fostering innovation, sustainability, and scalability. From reducing GST complexities to supporting green practices and leveraging technology for financial inclusion, the proposed measures have the potential to empower small businesses to thrive in a globally competitive and environmentally sustainable ecosystem.
The diverse expectations from the Union Budget 2025 reflect the aspirations of India’s SME and MSME sectors. Strategic reforms, financial support, and a focus on sustainability and innovation could unlock unprecedented growth and resilience. As businesses prepare for this critical juncture, the budget holds the promise of shaping a brighter future for Indian enterprises and the economy as a whole.
By focusing on credit access, compliance simplification, sustainability, and technological advancement, the government can empower these sectors to drive economic growth and job creation.
As industry leaders like Bhavik Vasa aptly put it, “The upcoming budget is a pivotal opportunity to propel Indian MSMEs into the next phase of growth and global integration.” With the right policies and reforms, India’s small businesses can become the engines of a more resilient, inclusive, and sustainable economy.
