From Editorial Desk
Several leaders have commented on the relevance of the recently presented Budget 2026 by the Indian government for the MSME sector.
MSME is a very large segment in India and it employs millions of workforce. It also includes startups of small size, the IT business owners in the supply chain, professionals and small entrepreneurs who set up their own work rather than going for a job. The professionals, IT business leaders and entrepreneurs are in the organised sector. At the same time, it include lakhs of self employed individuals who may not be in the organised sector. Majority of the MSME entrepreneurs are young – both men and women – and many of them are engaged in multiple activities
The government has announced some schemes in this Budget, which directly impacts the youth and the MSME sector. Following are the comments related to these schemes from the public sector as well as from the industry sector –
“”The Yuva Shakti- driven Budget sets a strong and timely direction for India’s next phase of growth by placing youth and inclusive growth through technology-driven initiatives at the centre of national development. We welcome the proposed ‘Education to Employment and Enterprise’ Standing Committee, which recognises the need for a cohesive, outcomes-driven approach especially for the services sector and the evolving impact of AI on jobs. This signals a continued focus and strengthening of our skilling ecosystem through an integrated employability framework that closely aligns with Nasscom Foundation’s mission of building a future-ready, inclusive talent pool for India.
We are also encouraged by the Budget’s focus on empowering marginalised communities. The creation of Self-Help Entrepreneur (SHE) Marts marks a meaningful transition from livelihood support to women-led enterprise ownership, positioning women as key drivers of local economic growth. Alongside this, initiatives such as the Divyang Kaushal Yojana strengthen the pathway for inclusive skilling and dignified livelihoods for Persons with Disabilities, an area central to our work at the grassroots.
Overall, the Budget 2026-27, with its emphasis on youth, skills, MSMEs, technology and expanded opportunities in Tier II and Tier III India, strongly resonates with our vision of bridging the digital divide and advancing towards a Viksit Bharat.”
–Jyoti Sharma, CEO, Nasscom
“Budget 2026 marks a pivotal moment for India’s logistics and warehousing sector, with MSMEs rightfully positioned as the second engine of growth. The Rs 1,000 crore MSME growth fund, Rs 2,000 crore for micro enterprises; and the doubling of startup credit guarantees to Rs 20 crore demonstrate the government’s commitment to building a resilient, competitive entrepreneurial ecosystem.
As MSMEs scale, technology-enabled logistics will transition from being an advantage to a necessity. The traditional logistics model is increasingly burdened by compliance complexities and rising operational costs, particularly for smaller players. We need urgent reforms distinguishing modern logistics frameworks from legacy systems, along with progressive changes to the customs warehousing regime.
GST rationalisation and clearer policy frameworks will be game-changers in improving efficiency, encouraging formalisation, and reducing intra-city logistics costs. The budget has set the right intent. Now industry and government must collaborate to translate this into infrastructure-led, tech-driven transformation that unlocks the full potential of India’s logistics backbone.”
—Umang Shukla, Co-founder and CEO, Edgistify
“Union Budget 2026 signals a clear shift toward structural strengthening of MSME financing, with banks placed at the centre of execution. The most significant intervention is the deepening of TReDS, including mandatory routing of CPSE MSME payments and enhanced credit guarantees for invoice discounting.
From a banking perspective, this improves cash-flow visibility, shortens working-capital cycles and enables safer, receivable-backed lending rather than collateral-heavy approaches.
Also the proposed Rs 10,000 crore SME Growth Fund complements traditional bank credit by addressing the equity gap for scalable MSMEs. This is positive for banks as better-capitalised enterprises typically demonstrate stronger repayment capacity and lower credit risk, creating opportunities for long-term lending and cross-sell. Expanded credit guarantee coverage further strengthens lender confidence, particularly for micro and small enterprises, supporting both growth and priority sector objectives.
The Budget also reinforces data-led credit delivery, with integration across platforms such as GeM, GST and TReDS, allowing banks to sharpen underwriting, pricing, and early-warning mechanisms. Overall, Budget 2026 moves MSME banking from volume-driven lending to cash-flow-based, digitally enabled, and risk-calibrated financing, while placing strong emphasis on formalisation, resilience and sustainable growth of the MSME ecosystem.”
—Madhur Kumar, Chief General Manager, MSME Banking, Co-Lending and Supply Chain Finance, Bank of Baroda
“The Union Budget 2026 takes a decisive step towards building MSMEs as long-term growth champions rather than short-term survivors. The government’s three-pronged approach, combining a ₹10,000 crore SME Growth Fund for scaling high-potential enterprises, performance-linked incentives that reward productivity and formalisation, and a ₹2,000 crore top-up to the Self-Reliant India Fund for micro enterprises, recognises the very different credit needs across the MSME spectrum.
This layered approach is critical for ensuring that growth capital reaches small businesses ready to scale, while lifeline financing continues to support the smallest and most capital-constrained businesses that remain outside the reach of traditional credit guarantees. For us, this policy direction strengthens the foundation for responsible business lending, where credit is not just about liquidity, but about enabling formalisation, resilience and sustainable enterprise growth across India’s MSME ecosystem.”
—Gaurav Jalan, Founder & CEO, mPokket
Some Points to Note
- While these schemes seem well-intentioned to help the MSMEs, it has been observed in the past that only medium level enterprises are willing to avail of credit facilities. micro and small level enterprises are wary of availing credit on loan basis. This is because they work in risky and challenging environments and can’t be sure of having the ability to repay the loan on time.
- Further, adding the interest on loan can make the loan amount very large for the micro and small level enterprises. Hence, they may not be willing to avail of these facilities.
- Finally, there may be low level of awareness about these facilities among the micro and small level enterprises. They may not have the resources or the ability to run the digital apps to get the information.
The government should –
- Devise a system through which the credit amount is equally distributed among the micro, small and medium level enterprises.
- The loan repayment system should be lenient. If possible, no rate of interest should be charged on the loan from the micro and small level enterprises.
- The information about the government schemes should be widely distributed across the micro and small levels of the MSME segments.
Only if implemented correctly, can the MSMEs benefit from these schemes.
More to come. Watch this space for future posts.
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