Finance Minister Nirmala Sitharaman on Sunday announced a range of initiatives aimed at strengthening micro, small, and medium enterprises (MSMEs) as part of the Union Budget 2026-27. Speaking in Parliament, she highlighted measures to enhance finance access, scale up competitiveness, and support sectoral growth.
One key reform is making the Trade Receivables Discounting System (TReDS) mandatory for all central public sector enterprises (CPSEs) when procuring from MSMEs. Sitharaman said the platform will serve as a “transaction hub for all purchases from MSMEs,” ensuring faster payments and better financial inclusion.
The Finance Minister also proposed a ₹4,000-crore top-up to the Self Reliance India Fund in FY27 to provide additional equity support to MSMEs. Additionally, a new ₹10,000-crore fund will be created to develop “champion SMEs” capable of scaling manufacturing operations and enhancing competitiveness. The Self Reliance India Fund, first introduced in 2023, aims to infuse ₹50,000 crore in equity funding for viable MSMEs with growth potential.
Sitharaman further outlined plans for mega textile parks focused on value addition in technical textiles, alongside schemes such as the Natural Fibre Scheme, Textile Expansion and Employment Scheme, and National Handloom and Handicraft Programme. She reiterated the government’s commitment to developing infrastructure in Tier II and Tier III cities, supporting regional growth.
The Economic Survey, tabled before the Budget, emphasized the pivotal role of MSMEs in India’s industrial economy. MSMEs contribute nearly 35.4% of manufacturing output, around 48.6% of exports, and 31.1% of GDP. With over 7.47 crore enterprises employing more than 32.8 crore people, the sector ranks as the second-largest employer after agriculture.
The Survey noted that MSMEs are vital for supply chain integration, local value addition, and inclusive growth as India’s manufacturing sector becomes more globally connected. Credit to MSMEs has grown steadily, with MSME lending leading industrial credit expansion in H1FY26.
Budget 2025 had already introduced measures to strengthen the sector, raising investment and turnover limits for MSME classification, enhancing credit access, and expanding credit guarantee cover. Micro and small enterprises now enjoy a guarantee cover increase from ₹5 crore to ₹10 crore, unlocking an additional ₹1.5 lakh crore in credit over five years. Startups saw their guarantee cover double from ₹10 crore to ₹20 crore with reduced fees, while exporter MSMEs received term loans up to ₹20 crore under expanded guarantees.
New initiatives also provided support for first-time entrepreneurs from disadvantaged backgrounds and sector-specific schemes targeting productivity growth in footwear, leather, and toy manufacturing.
These steps underline the government’s focus on empowering MSMEs as a backbone of India’s manufacturing and export-driven growth, aligning finance, infrastructure, and policy reforms to ensure long-term competitiveness and inclusion.
