MSMEs in Focus: How Budget 2025-26 Fuels Sustainable and Inclusive Development

Abstract

Micro, Small, and Medium Enterprises (MSMEs) form the backbone of India’s economy, contributing significantly to *'3 e[ports and employment generation. 'espite their critical role, MSMEs continue to face persistent challenges including inadequate access to credit, barriers to digital transformation, regulatory bottlenecks and increasing global competition. The Union Budget 2025-26 introduces a series of reforms and initiatives aimed at addressing these constraints while fostering innovation, inclusivity and competitiveness. Key measures include revised 060( classification norms enhanced credit guarantees the introduction of 060( &redit &ards targeted funds for startups and first-time entrepreneurs and e[port promotion missions. The study is based on a qualitative and descriptive research design using secondary data sourced from government budget documents, policy reports, institutional publications and relevant academic literature. A thematic analysis approach is employed to evaluate the policy measures introduced in Union Budget 2025-26 and their implications for the MSME sector. Additionally, the budget emphasizes support for labor-intensive sectors, digital integration and alternative financing mechanisms. 7his paper analy]es these initiatives within the broader policy framework and highlights their potential to strengthen MSMEs as engines of economic transformation. It argues that while the budget provides a strong foundation for sustainable and inclusive growth, effective implementation, institutional coordination and entrepreneur awareness will be crucial to unlocking the sector’s full potential and advancing India’s goal of becoming a $5 trillion economy