Union Budget 2026–27: Rs 10,000 cr fund for ‘Champion MSMEs’

The Union Budget 2026–27 proposes a Rs 10,000 crore SME Growth Fund and a three-pronged approach—Equity, Liquidity, and Professional Support—to help MSMEs become ‘Champions’, with TReDS, GeM, and Corporate Mitras enhancing finance, compliance, and growth.

New Delhi: Finance Minister Nirmala Sitharaman on Sunday proposed a three-pronged strategy, including a Rs 10,000 cr dedicated fund, to help MSMEs grow as ‘Champions’.

In her Budget Speech, the Minister said the Modi government has undertaken comprehensive economic reforms towards creating employment, boosting productivity and accelerating growth.

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The “Reform Express” is well on its way and will maintain its momentum to help fulfil “our kartavya”, she said while presenting the first Budget prepared in the newly constructed Kartavya Bhawan. Earlier, the Budget used to be prepared in the North Block.

“We are inspired by 3 kartavya,” Sitharaman said, adding that the three kartavyas are: accelerate and sustain economic growth, fulfil aspirations and build capacity, and Sabka Sath, Sabka Vikas.

Under the first kartavya to accelerate and sustain economic growth, she proposed interventions in six areas, including creating ‘Champion MSMEs’.

Recognising MSMEs as a vital engine of growth, Sitharaman outlined a three-pronged approach — Equity Support, Liquidity Support and Professional Support — to help MSME grow as ‘Champions’.

“I propose to introduce a dedicated Rs 10,000 crore SME Growth Fund, to create future Champions, incentivising enterprises based on select criteria,” she said.

She also proposed to top up the Self-Reliant India Fund set up in 2021, with Rs 2,000 crore to continue support to micro enterprises and maintain their access to risk capital.

To provide MSMEs liquidity support, she announced plans to leverage full potential of TReDS. With TReDS, more than Rs 7 lakh crore has been made available to MSMEs.

To leverage its full potential, she proposed 4 measures, including mandating TReDS as the transaction settlement platform for all purchases from MSMEs by CPSEs, serving as a benchmark for other corporates; and introducing a credit guarantee support mechanism through CGTMSE for invoice discounting on TReDS platform.

Sitharaman also proposed to link GeM with TReDS for sharing information with financiers about government purchases from MSMEs and encouraging cheaper and quicker financing.

It is also proposed to introduce TReDS receivables as asset-backed securities, helping develop a secondary market, enhancing liquidity and settlement of transactions.

“Government will facilitate professional institutions such as ICAI, ICSI, ICMAI to design short-term, modular courses and practical tools to develop a cadre of ‘Corporate Mitras’, especially in Tier-II and Tier-III towns,” Sitharaman said. These accredited para-professionals will help MSMEs meet compliance requirements at affordable costs, she added.

On other reforms announced by Sitharaman, a Finance Ministry document said that extended timelines for revised and updated returns will allow MSMEs to correct errors without fear of penal consequences.

Simplified TDS provisions for manpower supply will benefit labour-intensive MSMEs, it said. Further, conversion of penalties into fees for procedural defaults will reduce adversarial litigation and promote trust-based compliance.