MSME Sector Looks to Budget for Credit Support and Growth Continuity

The micro, small and medium enterprises (MSME) sector remains a critical pillar of the Indian economy as the country prepares for the Union Budget on February 1. In the previous Union Budget (FY2025–26), the government allocated ₹22,138 crore to the Ministry of MSME, reflecting continued policy focus on small business growth, credit access, and employment generation.

A key component of MSME support in the last budget was the expansion of credit guarantee mechanisms. The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) was strengthened, helping facilitate collateral-free loans for small businesses. MSMEs currently contribute around 30% of India’s GDP, nearly 45% of total exports, and employ over 11 crore people, underscoring their economic importance.

Expectation: Ahead of Budget 2026, MSME stakeholders expect further enhancement of credit availability, especially through government-backed guarantee schemes and improved access to formal finance. There is also expectation of continued support for technology adoption and digitalisation to improve productivity.

Economic Context: Rising input costs and global demand fluctuations have placed pressure on smaller enterprises. Policy support through affordable credit and compliance simplification is seen as essential for maintaining business viability and competitiveness.

Prediction: While a sharp increase in headline allocations may be limited, targeted measures such as higher credit guarantee limits, faster loan disbursements, and better integration of MSMEs into supply chains are expected. The budget may also align MSME support with manufacturing and export-led growth strategies.

National Outlook and Hope: A stable and supportive policy framework for MSMEs is viewed as critical for inclusive growth. Strengthening the MSME ecosystem could boost employment, support regional development, and enhance India’s resilience amid global economic uncertainties.