The Union Budget 2025 , presented by Finance Minister Nirmala Sitharaman on February 1, 2025, received mixed reactions from small businesses in Ludhiana . While a section of local industry stakeholders believes that the government’s move to raise the thresholds for capital investment and turnover criteria is a significant boost to the MSME (micro, small, and medium Enterprises) sector, some voiced their disappointment regarding the absence of special package for Punjab and the lack of rationalisation of goods and services tax (GST) rates. Budget with ETTax calculator Upkar Singh Ahuja, President, Chamber of Industrial and Commercial Undertakings (CICU), praised the Budget, calling it a “balanced” one. “Even though the MSME industry has not directly been given a relief, announcements such as a reduction in green tax and other infrastructural support may bear results in the long term, said Ahuja, highlighting the Budget’s focus on fulfilling India’s long-term dream of becoming the third-largest economy globally. “However, I would request FM to reduce corporate tax and GST on steel,” Ahuja added. Click here to register for the Ludhiana event However, Gurmeet Singh Kular, President, Federation of Industrial and Commercial Organisation (FICO), shared mixed views on the recent budget announcements . While he welcomed the revision in the MSME definition, calling it a positive step, there was disappointment over the suspension of the Credit Link Capital Subsidy Scheme (CLCSS), which was designed to support MSMEs in upgrading their technology. Kular emphasised the importance of the CLCSS, urging the government to make the scheme permanent. He proposed increasing the limit to Rs 5 crore and the subsidy to 25% from the current 15%. This, he believes, would provide a significant boost to MSMEs, enabling them to adopt newer technologies and remain competitive in the global market. Ludhiana has the highest number of MSMEs in Punjab, with over 1.50 lakh units. 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Badish Jindal, President, Federation of Punjab Small Industries Associations (FOPSIA), expressed its disappointment with the Budget, describing it as “underwhelming” and “more of the same.” According to the Forum, “the Budget is a damp squib and just an old wine in a new bottle.” They feel that it lacked innovative initiatives to support the MSME sector, which is crucial for India’s economic growth. The Budget did not address the concerns regarding Section 43B. “The government made big announcements, but there is hardly any change in the MSME Budget . The Budget merely increased from Rs 21,189 crore in 2023-24 to Rs 22,452 crore in 2025-26. The Budget of the Prime Minister Employment Guarantee Scheme decreased from Rs 3,106 crore to Rs 2,954 crores during the same period. The Budget for the Guarantee Emergency Credit Line (GECL) facility to eligible MSME borrowers (CGTSME) decreased from Rs 14,000 crore to Rs 9,000 crore. Big announcements were made for skill development, but the Budget of the ministry hardly increased—from Rs 7,205 crore in 2023-24 to Rs 8300 crore in 2025-26,” said Jindal. Change in MSME definition According to the Budget 2025, MSMEs with investments up to Rs 2.5 crore will now be classified as microenterprises, an increase from the previous threshold of Rs 1 crore. Firms with investments up to Rs 25 crore will be known as small enterprises, up from Rs 10 crore. Additionally, MSMEs with investments up to Rs 125 crore will be recognised as medium enterprises, a rise from the earlier limit of Rs 50 crore. Similarly, for micro enterprises, the turnover limit has been revised from Rs 5 crore to Rs 10 crore; for small enterprises, the turnover limit has been increased from Rs 50 crore to Rs 100 crore and for medium enterprises, the turnover limit has been raised from Rs 250 crore to Rs 500 crore. iStockA small business owner from Ludhiana stated that the unchanged 45-day payment rule will adversely impact MSMEs. The announcement to increase the threshold of MSME turnover criteria from Rs 250 crore to Rs 500 crore has sparked concerns that larger corporations will reap most of the benefits. This move, according to Jindal, will disproportionately benefit just 1% of MSMEs with higher turnovers, who will receive 95% of the benefits. “In India, 67% of MSMEs have turnover below Rs 10 lakh and 99% have turnover below Rs 1 crore. The increase in the definition of MSME turnover from Rs 250 crore to Rs 500 crore shows the intention of the government to give benefits to the corporates,” he said. This change in definition could result in smaller MSMEs being excluded, as they may not fulfil the new criteria, noted Jindal. However, Bhamra supported this initiative, saying it will help to boost MSMEs. The 45-day payment rule A small business owner from Ludhiana stated that the unchanged 45-day payment rule will adversely impact MSMEs, leaving them to grapple with severe cash flow constraints. “Despite repeated pleas from the sector, the government did not provide any relief, perpetuating the liquidity crisis faced by small businesses,” he said. For context, the 45-day payment rule is a government mandate designed to safeguard the interests of MSMEs. This regulation stipulates that businesses must settle their outstanding dues to MSMEs within a maximum period of 45 days, ensuring that these smaller entities receive timely payments and maintaining a stable cash flow. Narinder Bhamra, President, Fastener Manufacturers Association of India, agreed, expressing his dismay at the lack of support for MSMEs in the Budget. “There is no fresh subsidy or support in the Budget for the MSMEs. Especially, there is no withdrawal of Section 43B regarding payments to MEME concerns within a specified time, which is hurting the MSMEs,” he said. “Although tax slabs under Section 115BAC have been revised to give relief to individual taxpayers, no tax relief has been given to partnership firms, which are a major family entity in the country and are mainly MSME entities. Their tax rate continues to be higher than corporations, which definitely requires consideration,” added Bhamra. Cheaper imports may harm local industry The reduction in import duties on bicycles from 35% to 20% and furniture from 25% to 20% is expected to negatively impact Indian manufacturers. This move may lead to higher competition from cheaper imports, potentially harming the local industry. The cut in import duties will certainly affect sectors such as the footwear, bicycle, especially the auto sector, which is passing through a tough period. According to Jindal, the bicycle and footwear industry faces a major threat from Chinese imports, and “this will badly affect their manufacturing in India.” Bhamra says this decision would hamper the growth of Indian manufacturers because the import of bicycles and components will adversely affect the ‘Make in India’ drive. Meanwhile, ET Make in India SME Regional Summit will be held in Ludhiana on February 7. ET Make in India SME Regional Summit is a series of on-ground events held across India to bring together local MSMEs, policymakers, enablers and industry stakeholders. These summits aim to unravel opportunities, tackle challenges, and foster knowledge-sharing and networking to propel the next phase of growth for Indian MSMEs. Click here to register for the Ludhiana event
