MSMEs: The Backbone of India’s Economy — Features, Benefits & Their Growing Impact

Micro, Small, and Medium Enterprises (MSMEs) are very important for India’s economy. They help in making money, selling goods to other countries, and giving jobs to people. The government updates the rules for MSMEs from time to time so that businesses can get benefits like easy loans, discounts, and tax savings. In the 2025 budget, Finance Minister Nirmala Sitharaman changed the MSME rules. Now, businesses can invest 2.5 times more money, and the sales limit is also doubled. This change will help small businesses grow, try new ideas, and succeed.

The Union Budget 2025–26 brings new plans to support small businesses (MSMEs) because they are important for India’s growth, just like farming, investment, and exports.

• The rules for what counts as an MSME have changed, allowing more businesses to qualify.
• Small businesses will find it easier to get loans because the government is increasing loan protection.
• A special program will help first-time business owners from weaker backgrounds with money support.
• New efforts will also boost industries like footwear, leather, and toy making.

In this blog, we will talk about How to register an MSME in India, the different Government schemes and subsidies for MSMEs, and the Role of MSMEs in economic development. We will also look at some of the Best business ideas for MSMEs in India and the Latest Budget Changes in MSME policies in India. Additionally, we will explore MSME Registration, the various MSME Schemes, and the many MSME Benefits available for small businesses. Lastly, we will discuss the MSME Definition and the MSME Growth and Challenges in India that affect this sector.

Role of MSMEs in Economic Development

MSMEs play a very important role in India’s economy because they help in many different ways:

1. Employment Generation — MSMEs provide jobs to more than 110 million people. This makes them the second-largest source of employment after agriculture.

2. Contribution to GDP — These businesses add 30% to India’s GDP, which makes the economy stronger.

3. Export Growth — MSMEs are responsible for more than 45% of India’s exports. This helps the country trade with other nations.

4. Rural Development — Many MSMEs work in villages and small towns. This reduces migration to big cities and helps in the overall development of rural areas.

5. Innovation and Entrepreneurship — Small businesses and startups create new ideas and technologies. This leads to more jobs and business opportunities.

Despite these achievements, MSME growth and challenges in India still exist. Some of the challenges include limited access to credit, outdated technology, and regulatory burdens.

How to Register an MSME in India

MSME Registration, which was earlier called Udyog Registration, is now known as Udyam or MSME Registration. The new system is improved with better features, making it easier to use.

Getting MSME Registration is simple and has many benefits, like tax savings, subsidies, and easy loan approvals. The process is completely online and can be done through the Udyam Registration Portal. Here’s an easy step-by-step guide to help you:

1. Go to the Udyam Registration Portal — This is the official government website where businesses can register.

2. Enter Aadhaar Details — The business owner needs to provide their Aadhaar number, which should be linked to their business.

3. Fill in Business Information — Important details like PAN, GST number, and business category need to be entered.

4. Self-Declaration of Business Type — Choose whether your business is a Micro, Small, or Medium Enterprise based on its turnover and investment.

5. Submit for Verification — After filling in all the details, submit the form for verification.

Once your application is approved, you will get a unique MSME certificate. This certificate helps you enjoy MSME Benefits.

Benefits of Udyam Registration for businesses

Udyam Registration offers several benefits to businesses, especially Micro, Small, and Medium Enterprises (MSMEs):

1. Access to Government Schemes- Businesses can avail of subsidies, financial assistance, and other benefits under various government schemes.
2. Simplified Loan Process- Easier access to collateral-free loans and lower interest rates.
3. Tax and Duty Exemptions- Eligibility for certain tax exemptions and reduced import/export duties.
4. Protection Against Delayed Payments- Legal protection and interest on delayed payments from buyers.
5. Priority in Government Tenders- Preference in bidding for government contracts.
6. Enhanced Credibility- Boosts trust and marketability with a recognized certification.

Government Schemes and Subsidies for MSMEs

The Indian government has started many MSME Schemes to help small businesses grow and get financial support. Some of the most popular schemes are:

1. Prime Minister’s Employment Generation Programme (PMEGP)
This scheme provides financial help to start small businesses. It offers loans with government subsidies to create job opportunities and promote self-employment.

2. Interest Subsidy Eligibility Certificate (ISEC)
ISEC lowers loan interest rates for small businesses and cooperatives. It makes borrowing more affordable, helping businesses grow and expand easily.

3. Credit Guarantee Trust Fund for Micro & Small Enterprises (CGTMSE)
Small businesses can get loans without collateral through CGTMSE. It supports entrepreneurs by providing financial assistance for business expansion.

4. Market Promotion & Development Scheme (MPDA)
MPDA helps artisans and small businesses promote their products. It provides funds for marketing, exhibitions, and branding to boost sales and income.

5. Financial Support to MSMEs in ZED Certification Scheme
MSMEs receive financial aid to improve product quality and efficiency. The scheme helps businesses get certifications, training, and better production methods.

These MSME Benefits make sure that businesses get better access to money, helping them grow and succeed in both local and international markets.

Udyam registration certificate

Udyam registration is a free and simple online process to register small businesses (MSMEs) in India. No paperwork is needed. After registering, the business gets an online certificate called the Udyam registration certificate. This certificate has a unique 16-digit number that stays the same forever.

NIC code

“NIC” refers to the National Industry Classification code. It is used to classify the primary activity and sector of an enterprise. the NIC codes are related to dal (pulses) milling under the manufacturing sector-

• NIC 2 Digit- 10 — Manufacture of food products
• NIC 4 Digit- 1061 — Maufacture of grain mill products
• NIC 5 Digit- 10613 — Dal (pulses) milling

Latest Budget Changes in MSME Policies in India

The MSME (Micro, Small, and Medium Enterprises) sector is very important for India’s economy. It helps in manufacturing, exports, and job creation. There are about 5.93 crore MSMEs in India, providing jobs to over 25 crore people. In 2023–24, MSMEs contributed 45.73% of India’s total exports, making India a strong manufacturing country. The government’s new budget aims to support MSMEs by helping them grow, innovate, and compete better.

Key Highlights of Union Budget 2025–26 for MSMEs-

Better Classification System

-MSME investment and turnover limits have been increased by 2.5 times and 2 times, making it easier for them to grow.

More Credit Support
-Small businesses can now get up to ₹10 crore in credit guarantee, helping them access ₹1.5 lakh crore in loans over five years.

-Startups will get a ₹20 crore credit guarantee, with lower loan fees.

-MSME exporters can get loans up to ₹20 crore.

Credit Cards for Micro Enterprises
-₹5 lakh credit cards will be given to micro businesses, with 10 lakh cards issued in the first year.

Support for New Entrepreneurs

-A ₹10,000 crore Fund of Funds will support startups.

-₹2 crore loans for 5 lakh first-time women, SC, and ST entrepreneurs.

Boost for Labour-Intensive Industries

-Footwear, leather, and toy industries will get government support to create more jobs.

Manufacturing and Clean Energy
-A National Manufacturing Mission will help small and big industries grow.

-Support for clean energy industries like solar panels, EV batteries, and wind turbines.

These steps will help MSMEs grow, create jobs, and strengthen India’s economy.

How Can Biz Consultancy Help You Start Your MSME Business?

If you are planning to start your business in the MSME sector, Biz Consultancy is here to guide you at every step. From business setup and registration to obtaining necessary approvals and government support, they provide end-to-end assistance. Whether you need help with legal formalities, funding opportunities, or compliance requirements, Biz Consultancy ensures a smooth and hassle-free business journey, helping you establish a strong foundation for success.

Conclusion

MSMEs are the backbone of India’s economic growth. They create jobs, add to the country’s GDP, and support both rural and urban economies. The government is working hard to make the MSME sector stronger by offering MSME registration, financial schemes, and helpful policies. With more focus on innovation, sustainability, and making business easier, MSMEs are ready to play an even bigger role in shaping India’s future.

If you’re thinking about starting your own MSME, this is the perfect time to use government support and take advantage of the opportunities available.