The Union Budget 2026 has announced a major support package for micro, small and medium enterprises (MSMEs), including a ₹10,000 crore SME Growth Fund, higher public capital expenditure and enhanced liquidity and credit support to strengthen small businesses.
Presenting the Budget in Parliament, Finance Minister Nirmala Sitharaman said the new growth fund would help create future MSME champions with the potential to scale up into large enterprises.
In addition, the Finance Minister announced a ₹4,000 crore top-up to the Self-Reliance India Fund, which was launched in 2023 to provide equity funding of up to ₹50,000 crore to viable MSMEs. The fund focuses on enterprises with the capacity to expand and generate employment.
The Budget also proposed increasing public capital expenditure for the MSME sector to ₹12.2 lakh crore in FY27. Sitharaman said the government would continue to develop infrastructure in Tier 2 and Tier 3 cities, a move expected to benefit MSME clusters outside major metros.
To ease funding constraints, the Finance Minister announced additional administrative and financial support measures for MSMEs. These include strengthened liquidity support and an expanded credit guarantee mechanism.
The government also proposed making the Trade Receivables Discounting System (TReDS) a mandatory transaction platform for all purchases from MSMEs by central public sector enterprises. This is expected to improve payment discipline and ease working capital pressures for small firms.
Industry experts said the measures could significantly improve access to capital for MSMEs. Simranjeet Singh, CEO – SME and Retail Business at Anand Rathi Global Finance, said the three-pronged approach of a growth fund, incentives for MSME manufacturers and strong liquidity support would help address chronic capital shortages in the sector.
He added that linking the Government e-Marketplace with TReDS and enabling securitisation of TReDS receivables could unlock fresh liquidity, while initiatives such as the corporate mitra scheme would help MSMEs navigate complex compliance requirements.
The Budget also proposed an integrated textile programme with five components, aimed at supporting the sector amid challenges arising from steep US tariffs. Key initiatives include the Natural Fibre Scheme, the Textile Expansion and Employment Scheme, and the National Handloom and Handicraft Programme.
