New Delhi, February 1, 2026 – Finance Minister Nirmala Sitharaman, presenting the Union Budget 2026, unveiled a comprehensive three-pronged strategy aimed at strengthening India’s Micro, Small, and Medium Enterprises (MSMEs). Recognizing the sector as the backbone of employment and innovation, the government has outlined measures in equity, professional support, and liquidity to ensure sustainable growth.
Equity Support
The centerpiece of the equity initiative is the launch of a ₹10,000 crore SME Growth Fund, designed to provide capital infusion for scaling enterprises. In addition, the Self-Reliant India Fund (2021) will receive a ₹2,000 crore top-up, reinforcing the government’s commitment to nurturing MSMEs with long-term financial backing. These funds are expected to help small businesses expand operations, invest in technology, and compete globally.
Professional Support
To address compliance and governance challenges, the Budget proposes the creation of ‘Corporate Mitras’ through professional institutions. These advisors will primarily serve MSMEs in Tier-II and Tier-III towns, offering affordable assistance in regulatory filings, tax compliance, and corporate governance. The initiative aims to reduce the burden of complex legal requirements on small businesses, enabling them to focus on growth and innovation.
Liquidity Support via TReDS
The third pillar focuses on liquidity, with the government mandating the use of the Trade Receivables Discounting System (TReDS) as the transaction settlement platform for all purchases from MSMEs by Central Public Sector Enterprises (CPSEs). This move is expected to set a benchmark for private corporates, ensuring timely payments and improved cash flow for small businesses.
Further, a credit guarantee support mechanism under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) will be introduced for invoice discounting on TReDS. This will provide MSMEs with easier access to working capital, reducing dependence on costly loans.
Integration with GeM and Secondary Market Development
In a significant step, the Finance Minister announced the linking of the Government e-Marketplace (GeM) with TReDS, enabling cheaper and quicker financing for MSMEs engaged in government procurement. Additionally, the Budget proposes treating TReDS receivables as asset-backed securities, paving the way for a secondary market. This innovation is expected to enhance liquidity, attract institutional investors, and streamline settlement of transactions.
Implications for MSMEs
The three-fold approach reflects a holistic vision:
- Equity support ensures long-term capital for expansion.
- Professional support reduces compliance costs and builds governance capacity.
- Liquidity support guarantees smoother cash flow and financial resilience.
Industry experts believe these measures will not only strengthen MSMEs domestically but also position them as competitive players in global supply chains. By combining financial, professional, and structural support, the Union Budget 2026 marks a decisive step toward empowering India’s small businesses.
