Budget 2026: How the Rs 10,000 crore SME fund aims to build India's future?

In the Union Budget 2026-27, Finance Minister Nirmala Sitharaman proposed a Rs 10,000 crore SME Growth Fund to help small and medium enterprises scale into global players. This dedicated fund aims to move beyond providing simple credit and focuses on equity support for firms with high growth potential.

The MSME sector contributes nearly 30% to India's GDP and almost 45% of its total exports. Historically, government support for these units relied heavily on debt and credit guarantee schemes. The 2026-27 Budget signals a change by emphasising equity participation.

The Rs 10,000 crore SME Growth Fund will target enterprises that demonstrate export readiness and technical capability but lack the capital to scale. Unlike loans, this equity support allows businesses to invest in high-end machinery and research without the immediate burden of monthly interest repayments. This fund operates alongside a Rs 2,000 crore top-up to the existing Self-Reliant India (SRI) Fund, which continues to provide risk capital to micro-enterprises.

Mandatory liquidity via TReDS

In terms to solve the chronic problem of delayed payments, the government announced that all Central Public Sector Enterprises (CPSEs) must now use the Trade Receivables Discounting System (TReDS) for their purchases from MSMEs.

This move mandates that CPSEs settle invoices through a digital auction mechanism, ensuring small suppliers receive their cash immediately from financiers rather than waiting for 45 to 90 days.

The budget also proposed treating TReDS receivables as asset-backed securities to create a secondary market, which is expected to lower financing costs for small businesses.

Creating 'Corporate Mitras'

The government will develop a new cadre of professionals known as "Corporate Mitras" specifically in Tier-2 and Tier-3 cities. These individuals will assist MSMEs with compliance, tax filings, and regulatory requirements. This initiative aims to reduce the high cost of professional consultancy which often prevents small units from formalising or expanding into new markets.

Cluster revival and manufacturing

The Finance Minister proposed reviving 200 legacy industrial clusters across the country. These clusters ranging from textiles in Tiruppur to auto components in Pune, will receive direct support for infrastructure upgrades and the establishment of high-tech tool rooms. To further support global trade, the budget removed the Rs 10 lakh per consignment value cap on courier exports, allowing small businesses to ship higher-value goods to international customers with fewer hurdles.