The Union Budget 2022 – What’s in for MSMEs & Startups

The most awaited announcement of 2022 is here now. This year, the budget has a strong focus on the MSMEs. It puts considerable emphasis on almost every industry and digitization in the nation.

The pandemic has been a situation full of complexities for everyone. Startups and MSMEs have also suffered a lot. Furthermore, the OMICRON variant acted as the fuel to the pandemic’s fire and people’s struggles. Keeping this in mind, the budget is focusing on making the country’s conditions better and is emphasizing to a great extent the betterment of MSMEs.

The union budget of 2022-23 includes numerous benefits for MSME sectors in India. There are measures for the MSME sector and startups that will help them grow and make their positions even better as the third largest startup ecosystem in the world.

All ears were focusing on the words of Smt Nirmala Sitharaman, the Finance Minister who announced the Union Budget of 2022-23 on 1st February 2022. The budget allows MSMEs to operate and do business more smoothly. It focuses on the improvement and development of the economy as a whole.

Healthcare and infrastructure seem to be the central focus of this year’s budget, and there are investments for roadways & logistics networks’ expansion. The government believes that MSMEs and Startups have the potential to increase employment opportunities with the required official help and development. Let’s look at what benefits MSMEs and Startups get from this year’s budget.

Enhancement of MSME’s Growth

MSMEs and Startups are the Indian economy’s backbone and constitute almost about 45 per cent of the country’s total manufacturing output, 40 per cent of exports, and almost 30 per cent of the national GDP.. That’s why their overall growth and development means the nation’s development and progress as a whole. In this year’s budget, the government decided to roll out a 6 thousand crore outlay for the Raising and Accelerating MSME Performance (RAMP) programme. Hence, the RAMP will lead to the growth and development of the MSMEs. Furthermore, it’s also fueling these sectors to be more efficient, resilient, and competitive. It’s an excellent initiative to enhance MSME growth.

New Opportunities for Startups

Startups in India have a significant hand in boosting India’s economic growth and are some of the most successful startups globally. The startups established before 31.03.2022 will enjoy the benefits of a tax incentive for 3 consecutive years out of 10 from their establishment. This initiative will allow startups to scale up their business effectively.

Furthermore, there will be fund blended capital for rural enterprises and agriculture startups. This capital gain will be facilitated through NABARD will include activities for startups. The activities include rent-basis machinery for farmers at the farm level, technology and FPOs, and IT-based support.

In addition to that, the government has also introduced an extended period for claiming tax holidays for the startups. It helps entrepreneurs to take benefit and make their startups more innovative.

Enhanced Focus on Digitization

Currently, digitization is one of the most significant transformations globally that we can notice. The Indian government acknowledges this transformation, which is why this year’s budget supports India’s transition to digital innovation.

The government even announced that we would see the launch of India’s blockchain digital currency introduced by RBI. This will come with some amounts of taxes; however, it’s an incredible initiative to support the blockchain and digital currency development in India. It will be beneficial for MSMEs and startups to be more technology and digitization driven.

Extension of ECLGS

In the new budget, the ECLGS or Emergency Credit Line Guarantee Scheme is extended to March 2023 from March 222. Further, the guarantee cover of ECLGS is now expanded by 50,000 crores and to a total of 5 Lakh INR cover. The additional coverage is for the hospitality industry and related enterprises.

Emergency Credit Line Guarantee Scheme (ECLGS) has delivered much required additional credit to more than 130 lakh MSMEs. This has allowed them to mitigate the unfavourable influence of the pandemic. The hospitality and corresponding services, especially those by Micro and Small Enterprises (MSEs), are yet to regain their pre-pandemic business level.

The extension of ECLGS will help the MSMEs that were impacted by the pandemic. Although, this applies only to a few MSME retails.


Credit Guarantee Trust for Micro and Small Enterprises (CGTMSE) scheme will be revamped with funds infusion. This will stimulate additional credit of INR 2 lakh crore for MSEs and boost employment opportunities.

Interlinking of MSMEs Compliance and Formalization Platforms

The government has decided to interlink the four portals: National Career Service (NCS), Udyam, e-Shram, and Atmanirbhar Skilled Employee-Employer Mapping (ASEEM). It will allow the enhanced scope of MSMEs. It focuses on formalizing the economy and enhancing entrepreneurship opportunities for everyone. Since this initiative facilitates operability, it improves entrepreneurial opportunities.


The union budget of 2022-23 brings a new ray of hope to the MSMEs. The initiatives under this budget are highly beneficial to the startups as well. It helps in promoting the development and growth of such businesses.

The government’s plan to make India’s blockchain-based digital currency and acknowledge the benefits of startups and MSMEs for the India Economy is highly noticeable in the Union Budget of 2022-23.

Overall, the budget is well-balanced and focused on the country’s progress based on almost every industry. This time, the budget is aligned with the growing worldly trends, including digitization, growth, technological advancement and innovation.

The government is committed to long-term growth and cohesive development through this budget. Let’s see how this budget shapes up the MSMEs business better.


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