The Union Budget 2026–27 places Micro, Small and Medium Enterprises (MSMEs) at the core of India’s economic strategy, recognising their critical role in employment generation, exports, and GDP contribution. The policy focus aims to transform MSMEs into globally competitive “champion enterprises” through targeted financial, institutional, and structural reforms .
The Budget’s approach towards MSMEs reflects a structural shift from survival-oriented support to growth-oriented competitiveness, emphasizing scalability, formalisation, and global integration.MSMEs currently contribute significantly to the economy, accounting for 31.1% of GDP, 35.4% of manufacturing output, and 48.58% of exports, while employing over 32.82 crore people across 7.47 crore enterprises. This highlights their role as a backbone of the Indian economy and second-largest employer after agriculture.The government has adopted a three-pronged strategy—equity, liquidity, and professional support—to address long-standing constraints faced by MSMEs. Under equity support, the creation of a ₹10,000 crore SME Growth Fund and expansion of the Self-Reliant India (SRI) Fund aims to improve access to risk capital, enabling MSMEs to scale operations and innovate.Liquidity support measures focus on strengthening the Trade Receivables Discounting System (TReDS), which has already unlocked over ₹7 lakh crore in financing. Mandating TReDS usage for CPSE procurement, integrating it with GeM, and introducing credit guarantee-backed invoice discounting are expected to enhance credit flow and reduce delays in payments.Professional support is aimed at bridging capability gaps through initiatives like ‘Corporate Mitras’, where institutions such as ICAI, ICSI, and ICMAI will train professionals to assist MSMEs in compliance and management, especially in Tier-II and Tier-III regions.The removal of the ₹10 lakh cap on courier exports represents a major step towards promoting e-commerce exports, enabling small businesses, artisans, and startups to access global markets more efficiently. This reform is likely to boost cross-border B2C trade and digital commerce participation.Digital formalisation is another key pillar, with platforms like the Udyam Registration Portal (2020) and Udyam Assist Platform (2023) bringing millions of informal enterprises into the formal economy. Over 7.30 crore MSMEs have been registered, reflecting rapid formalisation and improved access to institutional support.Additionally, schemes like PMEGP, MSME Champions Scheme, CGTMSE, and PM Vishwakarma strengthen the ecosystem by promoting credit access, innovation, skill development, and market linkage. The expansion of ONDC and TEAM initiatives further integrates MSMEs into digital supply chains and e-commerce networks.The emphasis on labour reforms and Online Dispute Resolution (ODR) also aims to improve the ease of doing business, reduce compliance burdens, and ensure faster resolution of payment disputes.Overall, the policy framework signals a move towards formal, technology-driven, export-oriented MSME growth, aligning with India’s ambition of becoming a global manufacturing and services hub.
Updated - 15 February 2026; 11:22 AM | PIB