Finance Minister Nirmala Sitharaman announced a Rs 10,000 crore SME growth fund to create future champions in the Budget 2026.
Further, the Finance Minister announced a top-up of Rs 4,000 crore to the ongoing Self-Reliance India Fund. The fund was announced in 2023 to infuse Rs 50,000 crore in equity funding into MSMEs with the potential and viability to grow into large units.
Additionally, the Finance Minister proposed to increase public capital expenditure in the MSMEs sector to Rs 12.2 Lakh crore in FY2026-27.
“We will continue to develop infrastructure in Tier 2, Tier 3 cities”, FM Sitharaman said in the budget speech.
Administrative support to MSMEs
The finance minister announced additional administrative support to the Micro, Small and Medium Enterprises. The finance minister proposed a Liquidity support and Credit guarantee mechanism for MSMEs.
Additionally, FM proposes to make TReDS a transaction platform for all purchases from MSMEs by central public sector enterprises.
“The 3 pronged approach to create Champion MSMEs including the 10000 growth fund, incentivizing the MSME manufacturers and strong liquidity support with measures like 2000cr Self Reliant India Fund as well as the CGTMSE scheme with invoice discounting will boost the capital starved MSMEs. The proposed linking of Government e-marketplace with TReDS will help MSMEs get visibility on their payment cycles. Along with this, turning the TReDS receivables into asset‑backed securities will unlock fresh liquidity for the sector. Finally, the corporate mitra initiative to navigate the complex compliance process will help MSMEs foster growth.”, Simranjeet Singh, CEO – SME & Retail Business, Anand Rathi Global Finance, said.
While presenting the Budget 2026-27, the minister also proposed an integrated textile programme with five sub-parts, a move that could help the sector, which is facing challenges due to steep 50 per cent tariffs imposed by the US.
In her Budget speech, she proposed the Natural Fibre Scheme, Textile Expansion and Employment Scheme, and National Handloom and Handicraft Programme.
Prime Minister Narendra Modi said that the budget will help the MSMEs to go from local to global.
Size and key aspects of India’s MSME sector
India’s micro, small and medium enterprises industry comprises 69 million units, of which about 68.6 million are micro entities.
The share of MSME exports in India’s overall exports is 45.7 per cent, and their share in Gross Value Added (GVA) is 30 per cent of GDP. MSMEs’ share in manufacturing is 36.2 per cent, and the sector employs about 250 million people.
Earlier this month, the Government think tank NITI Aayog recommended setting up a national project management agency to implement a programme for MSMEs’ transition to green energy, as India aims to reach the net-zero carbon-emission goal by 2070.
MSMEs rely heavily on fossil fuels to meet their energy and process requirements, resulting in approximately 135 million tonnes of carbon emissions (MtCO2e) in 2022 alone.