MSMEs Demand Budget 2026 Fixes: Policy, Payments & GST

India's Micro, Small, and Medium Enterprises (MSMEs) are presenting clear expectations for the Union Budget 2026, emphasizing policy execution over headline schemes. Business sentiment is cautiously optimistic, with many MSMEs expecting growth in 2026, driven by improved recent performance.

Founders stress a significant policy mismatch, where timelines for government incentives often expire before products achieve market fit. They advocate for 10-15 year predictable incentives for product development and R&D. A compliance holiday for the initial years is also requested.

Delayed payments from large corporate buyers and PSUs continue to be a major constraint. MSMEs are calling for stricter enforcement of the 45-day payment framework, with automatic interest accrual on overdue invoices.

GST-related issues, especially inverted duty structures, are increasing working capital stress for manufacturers. Accumulating input tax credits without timely refunds, particularly for marketing and capital equipment, are cited as key pain points.

Looking globally, MSMEs seek enhanced support for exports, including dedicated desks at embassies and streamlined cross-border payment systems. Digitalisation and shared infrastructure, like innovation hubs, are also crucial for competitiveness.

As of January 2026, the MSME sector is on a path of measured confidence, planning expansions. Budget 2026 is anticipated to address payment discipline, policy alignment, and operational friction to enable certain scaling.