In a significant move to bolster the Micro, Small, and Medium Enterprises (MSME) sector, Finance Minister Nirmala Sitharaman has unveiled a comprehensive three-pronged strategy in the Union Budget 2026-27. Recognizing MSMEs as a vital engine of economic growth, the minister outlined focused initiatives on equity, liquidity, and professional support to help these entities evolve into "Champions" of the Indian economy.
Equity Boost Through Dedicated Funds
To address equity needs, Sitharaman announced the establishment of a Rs 10,000 crore dedicated SME Growth Fund. This fund is designed to incentivize enterprises based on select criteria, providing them with the necessary capital to scale operations and enhance competitiveness. Additionally, the finance minister proposed to top up the Self-Reliant India Fund, which was set up in 2021, with an extra Rs 2,000 crore. This infusion aims to continue supporting micro enterprises and ensure their sustained access to risk capital, fostering innovation and resilience in the sector.
Liquidity Support via TReDS Platform
For liquidity enhancement, the budget emphasizes leveraging the full potential of the Trade Receivables Discounting System (TReDS), an RBI-regulated digital platform. TReDS enables MSMEs to instantly discount their trade receivables or invoices through competitive bidding by financiers, having already facilitated over Rs 7 lakh crore in liquidity for MSMEs. To maximize its impact, Sitharaman announced four key measures:
- Mandating TReDS as the transaction settlement platform for all purchases from MSMEs by Central Public Sector Enterprises (CPSEs), setting a benchmark for other corporates.
- Introducing a credit guarantee support mechanism through the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for invoice discounting on the TReDS platform.
- Linking the Government e-Marketplace (GeM) with TReDS to share information with financiers about government purchases from MSMEs, encouraging cheaper and quicker financing.
- Proposing TReDS receivables as asset-backed securities to develop a secondary market, thereby enhancing liquidity and streamlining transaction settlements.
Professional Support for Compliance
On the professional front, Sitharaman highlighted the government's plan to facilitate institutions like the Institute of Chartered Accountants of India (ICAI), Institute of Company Secretaries of India (ICSI), and Institute of Cost Accountants of India (ICMAI) in designing short-term, modular courses and practical tools. These initiatives aim to develop a cadre of "Corporate Mitras", especially in tier-II and tier-III towns. These accredited paraprofessionals will assist MSMEs in meeting compliance requirements at affordable costs, reducing bureaucratic hurdles and fostering a more conducive business environment.
Overall, the Budget 2026-27 proposals reflect a strategic approach to empower MSMEs, addressing critical pain points through targeted financial and professional interventions. By combining equity injections, liquidity mechanisms, and skill development, the government aims to strengthen the backbone of India's economy and drive sustainable growth in the coming fiscal year.
