Union Budget 2025-26: A Paradigm Shift for Kerala’s MSMEs and Manufacturers
The **Union Budget 2025-26**, presented in July 2025, has redefined the landscape for Micro, Small, and Medium Enterprises (MSMEs) and industrial manufacturers across India. For the entrepreneurial ecosystem in Kerala, these reforms offer a golden opportunity to scale operations while remaining under the protective umbrella of MSME benefits. At Zohani Consulting Services, we have decoded the budget to help you navigate this "Complexity Simplified" transition.
Redefining Growth: New MSME Classification 2025
One of the most significant announcements is the doubling of investment and turnover limits for MSME classification. This move ensures that growing businesses do not lose their "MSME" status—and the associated subsidies—prematurely.
| Enterprise Category | Investment Limit (New) | Turnover Limit (New) |
|---|---|---|
| Micro | Up to ₹2.5 Crore | Up to ₹10 Crore |
| Small | Up to ₹25 Crore | Up to ₹100 Crore |
| Medium | Up to ₹125 Crore | Up to ₹500 Crore |
Unlocking Capital: Enhanced Credit Guarantee Schemes
Access to credit remains a top priority for Kerala's manufacturers. Budget 2025-26 introduced several measures to ease financial bottlenecks:
- 1. CGTMSE Ceiling Doubled: The credit guarantee cover for micro and small enterprises (MSEs) has been raised from ₹5 Crore to ₹10 Crore, aiming to unlock ₹1.5 lakh crore in additional credit over five years.
- 2. New Micro-Enterprise Credit Card: To support instant working capital, the government is issuing customized credit cards with a ₹5 Lakh limit for micro-units registered on the Udyam portal.
- 3. Export Support: For well-run exporter MSMEs, new term loans up to ₹20 Crore are now available under an enhanced guarantee cover to boost global competitiveness.
Incentivizing Employment: The ELI Scheme
A major highlight for the manufacturing sector is the Employment Linked Incentive (ELI) Scheme, approved in July 2025. This scheme provides incentives for two to four years to employers who generate additional jobs, specifically targeting first-time workers with salaries up to ₹1 Lakh. Manufacturing units enjoy extended benefits, receiving incentives for the third and fourth years as well.
Compliance & Ease of Doing Business
The government is also setting up a High-Level Committee for Regulatory Reforms to review non-financial sector regulations, licenses, and permissions. This initiative aims to strengthen trust-based governance and enhance the "Ease of Doing Business" by streamlining inspections and compliance requirements.
Whether you are managing your GeM Bidding profile or seeking ISO Certification, these July 2025 updates provide a robust framework for your business's 2026 success. Our team is ready to help you update your Udyam Registration to reflect these new classification limits and claim your eligibility for the new credit schemes.
Conclusion
Budget 2025-26 is a clear signal that the government views MSMEs as the primary engine for "Viksit Bharat". For Kerala's industrial manufacturers, the path to global competitiveness is now wider and more accessible than ever before.