MSMEs Demand Budget Boost: Lower Costs, Higher Loans!

The PHD Chamber of Commerce and Industry (PHDCCI) has outlined critical recommendations for the Union Budget 2026-27, emphasizing the vital role of Micro, Small, and Medium Enterprises (MSMEs) in India's economic trajectory. The chamber highlighted that MSMEs are essential for achieving a 10% economic growth rate, noting their substantial contribution to manufacturing output and their position as a major employer after agriculture. The sector's increasing integration into global trade, with exports forming a significant portion of its output, underscores the need for supportive policies.

PHDCCI's proposals include reintroducing a 2% interest subvention scheme for MSMEs on loans from banks and NBFCs, addressing the persistent issue of high credit costs. Furthermore, the chamber recommended revising the loan limits under the Pradhan Mantri MUDRA Yojana to reflect current project costs, suggesting increases for Shishu, Kishore, and Tarun categories. Support for MSME exporters, including a potential reintroduction of the Interest Equalisation Scheme, is also a key ask.

To further ease the operational burden, PHDCCI called for equity infusion through the Fund of Funds and suggested expanding MSME Facilitation Councils to include medium enterprises in delayed payment relief. They also proposed enhancing the Credit-Linked Capital Subsidy Scheme for technology upgrades and amending Section 44AB of the Income Tax Act to exempt micro enterprises with up to ₹10 crore turnover from mandatory tax audits. These recommendations aim to improve finance access, reduce regulatory burdens, and strengthen institutional support for the MSME sector.