From Survival to Scale: Why Budget 2026–27 Matters for India’s MSMEs

India is the home to over 7 crore MSMEs, contributing to 30% GDP, making it a significant engine of growth for the country. The Union Budget 2026–27 reflects a more integrated understanding of what it takes to build this critical sector.

True MSME enablement means greater bankability and less dependence on informal finance, enabling owners to plan with predictability, instead of operating from one cash‑flow shock to the next. Seen through that lens, the Budget signals a more thoughtful approach to strengthening the foundations of the MSME sector around three practical levers: equity, liquidity, and professional support. 

It proposes a dedicated ₹10,000‑crore SME Growth Fund to create ‘Champion MSMEs’ and provide growth capital to firms that are otherwise constrained by collateral‑based lending, and it tops up the Self‑Reliant India Fund by ₹2,000 crore so that micro enterprises can continue to access equity‑style risk capital for technology upgrades, capacity expansion and entry into new markets without relying solely on additional bank debt. This is complemented by measures to ease liquidity pressures. These include mandating wider use of the TReDS (Trade Receivables Discounting System) platform for Central Public Sector Enterprises (CPSE) purchases and linking TReDS with GeM data. The Budget also enables securitization of MSME receivables. Together, these steps aim to make trade receivables more predictable and easier to finance, reducing reliance on costly informal funding. 

The Budget’s recognition that financial support on its own is not sufficient captures the market truth. Many MSMEs struggle with professional support in compliance, bookkeeping, and basic governance, which directly affects their access to credit and markets. The proposal to develop a cadre of ‘Corporate Mitras’ through professional institutions is an attempt to make advisory and compliance support more accessible and affordable. By lowering the cost of such services and making them more accessible in Tier-II and Tier-III towns, the budget attempts to bridge a long-standing capability gap.

These measures sit against the backdrop of a large, systemically important sector. Stronger equity buffers, smoother cash flows and better governance are not just supportive add‑ons they are strategic requirements for sustaining growth, jobs and supply‑chain resilience.

Of course, policy intent must be translated into effective implementation. Delays in setting up and deploying the SME Growth Fund, uneven uptake of digital platforms such as TReDS, and weak coordination between implementing agencies could blunt the intended impact. Much will depend on how quickly rules are notified, how transparent selection and monitoring frameworks are, and whether payment discipline improves the value chain.

Ultimately, if implementation matches design, this approach has the potential to shift a large part of the MSME universe from margin‑constrained survivors to more stable contributors to productivity, employment and inclusive growth.

Abhishek Anand, Senior Partner, MicroSave Consulting (MSC)