Indian Government Increases MSME Credit Card Limit to Rs 10 Lakh to Support Small Enterprises

The central government has significantly increased the credit limit for micro, small, and medium enterprises (MSMEs). Registered micro enterprises can now access a credit limit of Rs 10 lakh, up from the previous Rs 5 lakh, through credit cards. The government plans to issue around 10 lakh credit cards in the first year of this scheme's launch.

The MSME Credit Card Scheme was introduced by Finance Minister Nirmala Sitharaman during the Union Budget 2025. This initiative is seen as a significant step in supporting MSME businesses across India. The scheme aims to enhance financial access for over one crore registered MSMEs, which employ more than 7.5 crore individuals.

The MSME sector is vital to India's manufacturing industry, contributing approximately 36% of the nation's manufacturing output. Additionally, MSMEs play a crucial role in exports, accounting for about 45% of India's total exports. This highlights their importance in the country's economic framework.

To benefit from the MSME credit card scheme, business owners must register on the Udyam portal. The registration process involves Aadhaar verification using a one-time password (OTP) and providing necessary details. Upon completion, applicants receive a permanent registration number. Registration is free and requires minimal documentation.

For those with EM-II or UAM registration under the Ministry of MSME, re-registration on the Udyam portal is necessary. It is important to note that an MSME can only file for one Udyam registration to avoid legal issues.

The Credit Guarantee Fund Trust for Micro & Small Enterprises (CGTMSE) manages the credit guarantee scheme for MSMEs, which started in 2000. This scheme offers collateral-free credit support up to Rs 5 crore for MSEs. The government has now raised this ceiling to Rs 10 crore under the Credit Guarantee Scheme (CGS) for banks.

Enhanced Support for MSMEs

According to the Union Budget 2025-26, startups will see their guarantee cover increase from Rs 10 crore to Rs 20 crore with a reduced fee of 1% for loans in 27 priority sectors. Exporter MSMEs can access term loans up to Rs 20 crore with improved guarantee cover.

The government has also enhanced its support for MSMEs by increasing their investment and turnover limits by 2.5 times and two times respectively in Budget 2026. This move aims to boost efficiency, technology adoption, and job creation within the sector.

This comprehensive approach underscores the government's commitment to strengthening MSMEs by providing better resources and scaling operations effectively.