PHDCCI Flags Credit, Compliance Reforms to Boost MSMEs in Union Budget 2026–27

The Micro, Small and Medium Enterprises (MSME) sector continues to play a central role in India’s manufacturing, exports and employment landscape. According to industry estimates cited by the PHD Chamber of Commerce and Industry (PHDCCI), MSMEs contributed around 30% of manufacturing output in 2025 and remain the second-largest employer after agriculture.

India’s export share has also shown steady growth, rising from 43.59% in FY23 to 45.79% in FY25 (up to June 2025), reflecting deeper integration of MSMEs into global value chains.

Formalisation Gains Through Udyam Registration

PHDCCI noted that more than 7.3 crore enterprises have registered on the Udyam Registration Portal and the Udyam Assist Platform between July 2020 and December 2025. The formalisation push has expanded the policy reach of the government and enabled targeted financial and regulatory interventions.

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Credit Cost Relief Tops Budget Wishlist

Among the key proposals, PHDCCI has called for the reintroduction of an interest subvention scheme, offering a 2% subsidy on new and incremental MSME loans from banks and NBFCs. The chamber said high borrowing costs continue to weigh on small businesses, particularly amid global economic volatility.

It has also sought an upward revision in Pradhan Mantri MUDRA Yojana loan limits, citing higher project costs since the scheme’s launch in 2015.

Export Support and Equity Funding Push

To support MSME exporters facing tariff pressures, PHDCCI has recommended restoring the Interest Equalization Scheme on export credit and extending it to service exporters. The chamber has also pitched greater equity infusion through the Fund of Funds, especially to support start-ups and early-stage enterprises.

Compliance and Technology Upgradation Measures

Other proposals include expanding the jurisdiction of MSME Facilitation Councils to cover medium enterprises, enhancing the Credit Linked Capital Subsidy Scheme for technology upgrades, and removing mandatory tax audit requirements for micro enterprises with a turnover of up to ₹10 crore.

PHDCCI estimates audit-related compliance costs range between ₹75,000 and ₹1.5 lakh annually for small firms.

Policy Focus Ahead of Budget 2026–27

Taken together, the proposals aim to ease access to finance, lower regulatory burdens, and strengthen institutional support for MSMEs as the government prepares the Union Budget for FY27.

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