Finance Minister announced ₹10 thousand crore for MSME
New Delhi. Finance Minister Nirmala Sitharaman in her Budget speech on Sunday, February 1, 2026, announced the allocation of a fund of ₹10,000 crore for the Small and Medium Enterprises (SMEs) Growth Fund, with an aim to provide fresh incentives to millions of small businesses and enterprises in the country. This fund will help support Micro, Small and Medium Enterprises (MSMEs). Additionally, the fund will help entrepreneurs access funds even in difficult credit environments.
Which companies will get help?
Presenting her ninth budget in Parliament, Finance Minister Sitharaman said that an SME Growth Fund of ₹ 10,000 crore will be created to support the growth of companies with potential in the country. This amount will help the business clusters to make a potential comeback. This will be a new lifeline for those companies which have become weak due to credit stress and outdated technology.
Self-reliant fund will be created
Sitharaman proposed to revive 200 old industrial clusters by upgrading infrastructure and improving technology. His speech also mentioned a plan for container manufacturing to keep pace with the global infrastructure ecosystem. For this purpose, the central government will launch a 'self-reliant fund', in which ₹4,000 crore will be initially infused. It is expected that this step will give a new impetus to the trade finance chain and support millions of small enterprises in the country, which find it difficult to survive due to lack of guaranteed credit schemes. Additionally, the fund will work with an incentive framework that will reward SMEs that meet certain criteria such as productivity, formalization and exports.
More than ₹7 lakh crore already available
The Finance Minister said that the Central Government has already made available an amount of more than ₹7 lakh crore through the Trade Receivables Discounting System (TReDS). The new measures will make it mandatory to make TReDS a one-step platform for MSME procurement by Central Public Sector Enterprises (PSUs). Along with this, Credit Guarantee Scheme support will be introduced and Government e-Marketplace (GeM) will be linked to TReDS for faster financing. These steps will develop the secondary market and increase liquidity transactions.
"Very good budget for MSME"
Commenting on the announcements made on MSMEs in the Budget, Vivek Jalan, Partner, Tax Connect Advisory Services, a multi-disciplinary pan India taxation firm, said, “Union Budget 2027 is very good for MSMEs, manufacturing and foreign funding. MSMEs have been supported by several proposals, including equity support, under which Rs 10,000 crore has been allocated for SME growth based on certain criteria.” Jalan "TReDS has been strengthened as a platform to facilitate procurement, invoice discounting and receivables. To ease the compliance of micro enterprises, professional organizations like ICAI, ICMAI, ICSI will develop "Corporate Mitras" to help in compliance," it said.
"Focus on mid-sized enterprises for the first time"
Anil Bhardwaj, General Secretary, FISME, said, "In my view, the Union Budget 2026–27 is structurally growth-promoting, economically sensible and focused on reforms, with a number of visionary initiatives beneficial for MSMEs. However, it gives greater priority to scale, competitiveness and system efficiency rather than MSME strength, especially for micro and small enterprises that are dependent on external sources. Facing setbacks, cost pressures and compliance burden, "As far as special announcements related to MSMEs are concerned, the most special is the initiative of creating 'Champion MSMEs' backed by ₹ 10,000 crore equity support. For the first time, the policy has focused on medium-sized enterprises. The top-up of ₹ 2,000 crore in the Self-reliant India Fund is also welcome."
"Getting loans for small businesses is an important priority"
Shreejay Sheth, Founder, LegalWiz, said, “Union Budget 2026 is a continuation Budget for entrepreneurs – with less focus on new slogans and more on strengthening the credit and compliance architecture that startups and MSMEs already depend on. By maintaining a better credit guarantee framework, introducing instruments like the ₹10,000 crore SME Growth Fund, and formalizing platforms like TReDS and Udyam, “By promoting this, the government is signaling that bank loan facilities and timely cash flow for small businesses are no longer a side-scheme, but essential priorities.”
According to Sheth, "Stability in key tax provisions for DPIIT-accredited startups and ongoing GST relief for small taxpayers provide much-needed policy certainty to founders for long-term planning. For India's startups and MSME ecosystem, this Budget will look less like a sea change and more like a tightening of nuts-and-bolts. It will drive entrepreneurs towards formalization, better compliance and stronger balance sheets, while keeping India in the sights of global capital." Will keep India economically reliable."
"A bold step to ensure strong growth"
According to Saurabh Agarwal, Tax Partner, EY India, "Budget 2026 shifts India's focus towards becoming a global manufacturing powerhouse. Schemes like ISM 2.0, increasing budget in ECMS, VGF for bio-pharma, heavy construction machinery and indigenously made sea-planes create significant demand. Meanwhile, revitalization of 200 industrial clusters will provide a vital boost to MSMEs. By securing upstream supply chains in chemicals and rare earths, the government is trying to create a 'strategic imperative' to provide investors with the necessary policy certainty to ensure long-term global competitiveness and growth."
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