India Budget 2025-26: Key updates for HR & business leaders to note

Finance Minister Nirmala Sitharaman has revealed measures to boost employment opportunities, skilling, and entrepreneurship across multiple sectors.

The India Budget 2025-26, unveiled by Finance Minister Nirmala Sitharaman on 1 February 2025 (Saturday), has outlined a series of strategic measures to boost employment, empower the workforce, and enhance skilling initiatives across various industries.

From increased credit support for entrepreneurs to focused policies on labour-intensive sectors, here are the key highlights for HR and business leaders to note.

Strengthening credit access for MSMEs and startups

To fuel job creation, the government has expanded credit access for micro, small, and medium enterprises (MSMEs) and startups. The credit guarantee cover has been raised from INR5 crore to INR10 crore for micro and small enterprises, potentially leading to additional credit of INR1.5 lakh crore over the next five years. Additionally, startups will now have access to guarantee-backed loans up to INR20 crore.

Launch of a Fund of Funds for startups

A new Fund of Funds will be established with a government contribution of INR10,000 crore, adding to the already existing INR91,000 crore committed to Alternate Investment Funds.

Scheme for first-time entrepreneurs

In an effort to promote inclusivity in business, a new scheme will support five lakh women, Scheduled Caste, and Scheduled Tribe first-time entrepreneurs with term loans of up to INR2 crore over the next five years. The scheme also includes online capacity-building initiatives to enhance managerial and entrepreneurial skills.

Boosting labour-intensive sectors

Recognising the role of labour-intensive industries in employment generation, the government has introduced sector-specific initiatives:

Footwear and leather: A dedicated focus product scheme will be implemented to enhance the design quality, component manufacturing, and machinery of India’s footwear and leather industry. The initiative is expected to create 22 lakh jobs, drive a turnover of INR4 lakh crore, and support exports worth over INR1.1 lakh crore.

Toy manufacturing: Building on the National Action Plan for Toys, the government will promote the sector through cluster development, skills, and sustainable toys.

Food processing: A National Institute of Food Technology, Entrepreneurship, and Management will be set up in Bihar to boost skilling and employment in the food processing sector, benefiting farmers and local entrepreneurs.

Strengthening urban livelihoods

A new scheme will be implemented to uplift urban workers by improving incomes, ensuring sustainable livelihoods, and enhancing quality of life. The PM SVANidhi scheme, which has already supported more than 68 lakh street vendors, will be revamped with enhanced loan provisions, UPI-linked credit cards, and capacity-building support.

Social security for gig workers

In a major step towards formalising the gig economy, the government will provide gig workers on digital platforms with identity cards and register them on the e-Shram portal. Additionally, they will receive healthcare benefits under the PM Jan Arogya Yojana, covering nearly one crore gig workers nationwide.

National centres of excellence for skilling

To build on the initiative announced in the July 2024 Budget, five National Centres of Excellence for skilling will be established in collaboration with global partners. These centres will focus on equipping youth with skills required for "Make for India, Make for the World" manufacturing.

Expanding research, development and innovation

The government has allocated INR20,000 crore towards a private sector driven research and development initiative, aimed at fostering job creation in deep-tech sectors. A Deep Tech Fund of Funds is also under consideration to support next generation startups.

Full updates on the India Budget 2025-26, which is expected to cost the government INR50.65 lakh crore, can be found here. 

Image: Screenshot of Budget reading on the official Budget website