Union Finance Minister Nirmala Sitharaman, while presenting the 2025-26 Budget on February 1, declared important reforms focused on boosting Micro, Small, and Medium Enterprises (MSMEs) and start-ups.
During the Budget Speech, the finance minister also announced that the investment and turnover thresholds for MSME classification would be increased to 2.5 and 2 times, respectively, to enhance scalability, technological advancements, and access to capital.
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Manufacturing Initiatives
The government plans to launch a specific initiative for the footwear and leather sectors while also enacting strategies to position India as a worldwide hub for toy manufacturing. Additionally, a National Manufacturing Mission will be established to assist small, medium, and large enterprises, strengthening the ‘Make in India’ initiative via policy assistance, governance structures, and implementation plans.
Delivering her eighth straight Budget, Sitharaman stated that the document emphasizes the requirements of the poor, youth, farmers, and women. Importantly, India now boasts more than 10 million registered MSMEs, providing jobs for 75 million people and accounting for 36 percent of the manufacturing industry. These businesses represent 45 percent of the nation’s exports.
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Investment and Turnover for Enterprises
| Type of Enterprise | Investment | Turnover | ||
| Current | Revised | Current | Revised | |
| Mirco | Rs 1 crore | Rs 2.5 crore | Rs 5 crore | Rs 10 crore |
| Small | Rs 10 crore | Rs 25 crore | Rs 50 crore | Rs 100 crore |
| Medium | Rs 50 crore | Rs 125 crore | Rs 250 crore | Rs 500 crore |
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Revised Income Tax Slabs
The budget proposes new direct tax slabs under the new income tax regime, ensuring that no income tax is payable for total income up to ₹12 lakh per annum. Salaried individuals earning up to ₹12.75 lakh per annum will pay no tax, owing to a standard deduction of ₹75,000. The revised tax rate structure is as follows:
- Income up to ₹4 lakh: Nil
- ₹4 lakh to ₹8 lakh: 5%
- ₹8 lakh to ₹12 lakh: 10%
- ₹12 lakh to ₹16 lakh: 15%
- ₹16 lakh to ₹20 lakh: 20%
- ₹20 lakh to ₹24 lakh: 25%
- Above ₹24 lakh: 30%
These changes aim to boost middle-class household savings and consumption. These initiatives reflect the government’s commitment to strengthening the MSME sector and providing tax relief to individuals, thereby stimulating economic growth and enhancing the ease of doing business in India.
