Budget 2026: Transforming The Landscape For MSMEs & Small Businesses

The Finance Minister of India, Smt Nirmala Sitharaman, presented and announced the specifics and provisions in the Union Budget of 2026-27 in the parliament on the 1st of February 2026. Among the many changes and upgrades in the budget for this year, one of the focus areas wherein changes have been introduced is the Micro, Small, and Medium Enterprises (MSMEs) and small businesses.

Micro, Small, and Medium Enterprises and small businesses are one of the most crucial sectors that drive economic growth and development, and hence are under the government’s purview. According to the Economic Survey conducted on 29th January 2026, it was seen that the MSME sector is responsible for around 35.4% manufacturing, 48.58% of exports, and around 31.1% of the Gross Domestic Product (GDP). The changes concerning MSMEs in the budget aim to expand the sector’s access to various significant components, like capital, market, technology, and support.

Read the article to learn more about the changes in the budget concerning MSMEs and small businesses, like the Champion SMEs scheme Budget 2026, or the MSME Growth Fund Budget 2026, including information on Union Budget 2026 small business benefits.

Budget 2026 Key MSME Policies

Among other changes, some are specifically concerning Micro, Small, and Medium Enterprises and small businesses, all of which are described in detail below for better understanding.

1. Champion SMEs Scheme Budget 2026

The Union Budget 2026-27 has set aside Rs. 10,000 crore for the Champion SMEs Scheme Budget 2026. This growth fund will help MSMEs invest in risk-bearing investments safely and, therefore, raise funds from various options. This will contribute heavily to the overall growth and development of a small business operating in the nation and eventually become ‘Champions’.

2. TReDS Mandatory For CPSE MSME Budget

One of the important announcements made by the Finance Minister is the mandate use TReDs (Trade Receivables Discounting System). It is a platform through which various purchases and transactions are made from MSMEs. By making its use compulsory for the year 2026, the government aims to solve a major issue of delayed payments, which is one of the biggest obstacles to the growth of an MSME.

3. Self Reliance India Fund Top-Up 2026

The Self-Reliance Fund was introduced by the government back in the year 2023 to include Rs. 50,000 crore in equity funding into MSMEs so that they can grow exponentially. With the introduction of this year’s budget, additional funds worth Rs. 4000 crore have been issued and added to the Self-Reliance Fund. The primary reason behind this decision is to support Micro, Small, and Medium Enterprises through equities and not debts.

This addition of funds also represents the growth of small businesses in India. i.e., how they have travelled from being ‘survival-oriented’ to ‘growth-oriented’.

Read More: Complete Guide To The MSME Sustainable (ZED) Certification Scheme

4. Changes & Additions For Boosting The Textile Industry

Micro, Small, and Medium Enterprises is an umbrella term under which many sub-sectors and industries come, one of which is the Textile Industry. The Union Budget 2026-27 has special provisions regarding the establishment of mega textile parks with a focus on ‘value addition to technical textiles’.

The Finance Minister also proposed several new and related govt schemes, like the Natural Fibre Scheme, the Textile Expansion and Employment Scheme, and the National Handloom and Handicraft Programme. These schemes not only aim to upgrade and drive growth toward traditional industries, like Khadi and Handloom, but also attract people to buy ‘Made in India’ products, especially those that hold cultural and traditional values of our vibrant and diverse country.

All the proposed schemes are described below in brief:

Natural Fibre Scheme: This govt scheme will support natural fibres, like silk, wool, and jute, align with man-made fibres, and new-age fibres. This scheme will not only strengthen the fibre industry of India but will also reduce its imports from other nations.

Textile Expansion and Employment Scheme: This govt scheme will focus on the modernisation of existing traditional textile industries through support in various forms, like capital for machinery, certification centres, etc. Along with the development of the sector, the scheme will also focus on generating new employment opportunities.

National Handloom and Handicraft Programme: The government will club all the presently running schemes concerning handloom and handicrafts under this new unified national plan. The ultimate aim is to support weavers and artisans and work on preserving India’s textile heritage.

Text-Eco Initiative: Govt initiative will create a sustainable environment for the growth of the textile industry of the nation, which will be on par with international standards.

Samarth 2.0: It is a skilling programme that will establish connections among industries, academic institutions, and skilled manpower.

Mahatma Gandhi Gram Swaraj Initiative: This government scheme will improve the operations of the textile industry by focusing on establishing global market links, branding, specialised training, and improvement in the quality of the products of the industry. This will also support the One District One Product (ODOP) initiative.

5. Easy Credit Options

One of the changes in the Union Budget 2026 is the restructuring of Non-Banking Financial Companies (NBFCs). NBFCs are very important for MSMEs as they are not only a bit lenient in their operations, but also work closely with the customers. The budget for this year aims to strengthen the regulations concerning Non-Banking Financial Companies.

Also Read: Comprehensive Guide To The National Bharat Laghu Udyam Suraksha Policy For MSMEs