The Union Budget 2026–27 places Micro, Small and Medium Enterprises (MSMEs) at the centre of India’s growth story, unveiling a comprehensive strategy to transform them into globally competitive champions. Recognising the sector’s pivotal role in employment generation and exports, the Budget proposes a three-pronged approach—equity support, liquidity enhancement and professional capacity-building—to strengthen MSMEs at scale.
MSMEs remain one of the most dynamic pillars of India’s economy. With over 7.47 crore enterprises employing more than 32.82 crore people, the sector is the second-largest employer after agriculture. It contributes around 35.4 per cent to manufacturing, 48.58 per cent to exports and 31.1 per cent to GDP, underlining its central role in India’s development trajectory.
Under the first of the three key Kartavyas—accelerating and sustaining economic growth—the Budget outlines targeted reforms to help MSMEs grow as national and global champions.
Equity support
A dedicated ₹10,000 crore SME Growth Fund has been announced to nurture future champions through structured equity support based on defined eligibility criteria. Additionally, the Self-Reliant India (SRI) Fund will receive an infusion of ₹2,000 crore to sustain risk capital support for micro enterprises. As of November 30, 2025, the SRI Fund has supported 682 MSMEs with investments worth ₹15,442 crore.
Liquidity support
More than ₹7 lakh crore has already been unlocked for MSMEs through the Trade Receivables Discounting System (TReDS), an electronic platform that facilitates the financing and discounting of trade receivables from corporates, government departments and PSUs.
To deepen liquidity, the Budget proposes:
– Mandating TReDS as the settlement platform for all purchases from MSMEs by CPSEs.
– Introducing CGTMSE-backed credit guarantee support for invoice discounting on TReDS.
– Integrating GeM with TReDS to enable faster and cheaper credit through better information-sharing.
– Introducing TReDS receivables as asset-backed securities to strengthen the secondary market and expedite settlements.
Professional support
The government will work with professional bodies such as ICAI, ICSI and ICMAI to design modular courses and practical tools for creating a cadre of ‘Corporate Mitras’. These accredited para-professionals, particularly in Tier-II and Tier-III towns, will help MSMEs meet compliance requirements at affordable costs.
Boosting global integration
To ease cross-border e-commerce, the Budget proposes complete removal of the ₹10 lakh value cap per consignment on courier exports. This reform is expected to reduce friction in B2C trade and empower small businesses, artisans and start-ups to access global markets. Technology-driven systems will also improve tracking and handling of rejected or returned shipments.
Digital formalisation gains momentum
The Udyam Registration Portal, launched in 2020, continues to drive formalisation through free, paperless registration. Complementing it, the Udyam Assist Platform was introduced in January 2023 to bring informal micro enterprises into the formal ecosystem and enable access to Priority Sector Lending.
Between July 2020 and December 2025, over 7.30 crore enterprises were registered across both platforms—4.37 crore on the Udyam Portal and 2.92 crore on the Udyam Assist Platform—marking a significant milestone in MSME digitisation.
Key schemes powering MSME growth
The Prime Minister’s Employment Generation Programme (PMEGP) continues to support micro-entrepreneurs through margin money subsidies on bank loans. Since its inception in 2008–09, over 10.71 lakh micro enterprises have been assisted with subsidies amounting to ₹29,249.43 crore, generating estimated employment for more than 87 lakh people.
The MSME Champions Scheme aims to upgrade processes, reduce inefficiencies and enhance global competitiveness. Its components—MSME-Sustainable (ZED), MSME Competitive (Lean) and MSME-Innovative (Incubation, Design and IPR)—are fostering quality, productivity and innovation. Over 2.71 lakh MSMEs registered under the ZED Certification Scheme, with 1.92 lakh certified. More than 32,000 MSMEs registered under the Lean scheme, with nearly 31,987 taking the Lean pledge.
E-commerce, dispute resolution and credit access
The rapid expansion of Open Network for Digital Commerce (ONDC), along with the TEAM (Trade Enablement and Marketing) initiative targeting onboarding of five lakh MSMEs, is enabling integration into formal e-commerce and supply chains at reduced transaction costs.
The MSME Online Dispute Resolution portal, launched on June 27, 2025—MSME Day—provides a structured, pre-adjudication framework to resolve delayed payment disputes amicably before proceedings under the MSMED Act, 2006.
The Credit Guarantee Scheme for Micro and Small Enterprises marked 25 years in 2025, crossing one crore guarantees since inception. From January 1 to November 30, 2025 alone, 29.03 lakh guarantees worth ₹3.77 lakh crore were approved. The guarantee coverage ceiling has been enhanced to ₹10 crore from ₹5 crore, with special concessions introduced for enterprises promoted by transgender entrepreneurs.
Artisan empowerment through PM Vishwakarma
Launched in September 2023, the PM Vishwakarma Scheme provides end-to-end support to artisans and craftspeople across 18 trades. As of December 1, 2025, over 30 lakh beneficiaries have registered, 23.09 lakh have been trained, and ₹2,257 crore has been sanctioned to 2.62 lakh beneficiaries as collateral-free loans in 2025. More than 30,000 beneficiaries have been onboarded onto GeM, expanding access to institutional buyers.
Labour reforms for a balanced ecosystem
The Labour Codes aim to modernise India’s labour ecosystem through digitisation, simplified compliance, strengthened social security and improved workplace safety. By rationalising thresholds and reducing procedural burdens, the reforms ease compliance pressures on MSMEs while safeguarding worker welfare.
Over the decades, the MSME sector has evolved into one of the most vibrant engines of India’s economy. By generating large-scale employment at relatively low capital cost, promoting industrialisation in rural and backward regions, and strengthening value chains, MSMEs have driven inclusive and balanced growth.
With focused equity infusion, enhanced liquidity, digital integration and structural reforms, the Union Budget 2026–27 positions MSMEs not merely as participants but as champions of a globally integrated, innovation-led India.
