PIB:- Published on 15 FEB 2026
Why is it in the news?
The Government of India has placed MSMEs at the centre of the Union Budget 2026–27 growth strategy, announcing a structured three-pronged reform package focused on equity infusion, liquidity expansion, and professional capacity-building. Given that MSMEs contribute over 31% to GDP and nearly half of India’s exports, these announcements signal a major policy shift toward scaling small enterprises into globally competitive firms. The reforms are being viewed as a blueprint for India’s next phase of manufacturing-led and export-driven growth.
MSMEs as the core of India’s growth architecture
The Budget acknowledges that Micro, Small and Medium Enterprises are no longer a peripheral support sector — they are now a central pillar of India’s economic strategy. With 7.47 crore enterprises employing over 32 crore people, MSMEs form the backbone of employment after agriculture. Their role in reducing regional inequality is particularly significant, as they generate livelihoods in rural and semi-urban India where large industries rarely reach.
By explicitly tying MSME reforms to the government’s “Kartavya” framework, the Budget frames enterprise growth as a social responsibility — linking economic expansion with inclusion, opportunity, and capacity-building.
The three-pronged strategy: From survival to scale
1. Equity support: Risk capital for future champions
The ₹10,000 crore SME Growth Fund and the expansion of the Self-Reliant India Fund signal a shift from subsidy-driven support to growth capital. MSMEs traditionally suffer from undercapitalization and limited access to risk finance. These funds aim to create a pipeline of high-potential firms that can evolve into mid-sized global exporters.
This is significant because Indian MSMEs often stagnate at micro scale due to fear of debt and lack of equity markets. Government-backed equity support reduces risk while encouraging innovation and expansion.
2. Liquidity reforms: Fixing delayed payments
Delayed payments remain one of the biggest operational challenges for MSMEs. Strengthening the Trade Receivables Discounting System (TReDS) ecosystem is therefore a structural reform rather than a temporary relief measure.
Mandating TReDS use by CPSEs, integrating it with government procurement platforms, and introducing credit guarantees for invoice discounting improves working capital flow. Faster cash cycles mean MSMEs can reinvest in production, technology, and hiring instead of being trapped in receivable bottlenecks.
3. Professional support: Governance for growth
The proposal to develop a cadre of “Corporate Mitras” is a recognition that many MSMEs fail not due to lack of demand, but due to compliance and management gaps. Affordable professional guidance can improve bookkeeping, taxation compliance, quality standards, and export readiness.
This is particularly transformative for Tier-II and Tier-III cities, where access to professional advisory services has historically been limited.
Opening global markets for small businesses
Removing the ₹10 lakh courier export cap directly targets India’s fast-growing e-commerce export sector. Artisans, home businesses, and digital-first startups can now ship higher-value goods without bureaucratic barriers. This reform aligns with India’s ambition to integrate into global value chains through digital trade rather than traditional export infrastructure alone.
It also reduces friction in cross-border B2C trade — an area where India has lagged behind China and Southeast Asian economies.
Digital formalisation and ecosystem reforms
The expansion of digital registration platforms, dispute resolution mechanisms, credit guarantee schemes, and artisan-focused initiatives like PM Vishwakarma shows a multi-layered approach:
Together, these measures aim to move MSMEs from informal survival units to structured, creditworthy enterprises.
Structural impact on the economy
If implemented effectively, these reforms could trigger:
The Budget signals a long-term transition: from protecting small businesses to scaling them into global players.
Conclusion
The Union Budget 2026–27 reframes MSMEs as engines of national competitiveness rather than welfare beneficiaries. By combining financial capital, liquidity reform, governance support, and digital integration, the government is attempting to build an ecosystem where small enterprises can grow without structural bottlenecks.
The success of these reforms will depend on execution — particularly in credit delivery, institutional coordination, and awareness at the grassroots level. If sustained, the MSME strategy could become one of the most consequential growth drivers of India’s next economic phase.
