Union Budget 2026-27: Big push for SMEs with ₹10,000 crore growth fund

Budget FY27 proposes a Rs 10,000-crore SME Growth Fund, mandatory TReDS adoption for CPSEs, and expanded credit guarantees to improve equity access, liquidity, and payment discipline for MSMEs

Union Finance Minister Nirmala Sitharaman on Sunday proposed the creation of a dedicated ₹10,000-crore SME Growth Fund to nurture future “champion” enterprises.

 

The fund will incentivise eligible SMEs based on select criteria, with a budgetary allocation of ₹500 crore earmarked for FY27.

 

“I also propose to top up the Self-Reliant India Fund set up in 2021, with ₹2,000 crore to continue support to micro enterprises and maintain their access to risk capital,” she said during her Budget speech for FY27.

 

To leverage the full potential of TReDS (Trade Receivables Discounting System) for MSMEs, the finance minister proposed four majors steps, including mandate TReDS as the transaction settlement platform for all purchases from MSMEs by Central Public Sector Enterprises (CPSEs), serving as a benchmark for other corporate.

 

 

“Introduce a credit guarantee support mechanism through CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) for invoice discounting on TReDS platform; link GeM (Government e-Marketplace) with TReDS for sharing information with financiers about government purchases from MSMEs, encouraging cheaper and quicker financing; and introduce TReDS receivables as asset-backed securities, helping develop a secondary market, enhancing liquidity and settlement of transactions,” She said while stating the other three steps in her speech.

 

She further said that with TReDS, more than ₹7 trillion has been made available to MSMEs.

 

Anuradha Thakur, secretary, Department of Economic Affairs, during the post-Budget press conference said, “CPSEs will be mandated to route both discounted and non-discounted bills through the TReDS platform to ensure payments to MSMEs are made within 45 days. We want CPSEs to act as pioneers, so that other corporates also follow.”

 

Anil Bhardwaj, secretary general, FISME, said, “The creation of ‘Champion MSMEs’, backed by a ₹10,000-crore SME Growth Fund for equity support, stands out as a significant step. For the first time, medium-sized enterprises have received focused policy attention.”

 

Vinod Kumar, president of the India SME Forum, said that making TReDS mandatory  means that every CPSE must now settle MSME invoices only via TReDS and not through off-platform payments, no “adjust later” excuses. When MSME supplies goods/services to CPSE, the invoice will get uploaded on TReDS. CPSEs will accept invoice digitally and MSME either gets paid early via discounting or waits for the due date.

 

“This also implies that CPSEs will now become anchor buyers for MSME suppliers. Similarly, the Credit Guarantee for TreDS discounting means that a CGTMSE provides partial credit guarantee to banks/NBFCs and if the buyer defaults, the guarantee kicks in,” he said.

 

The FM further noted that the government will facilitate professional institutions such as Institute of Chartered Accountants of India, Institute of Company Secretaries of India, and Institute of  Cost Accountants of India to design short-term, modular courses and practical tools to develop a cadre of ‘Corporate Mitras’, especially in Tier-II and Tier-III towns.

 

“These accredited para-professionals will help MSMEs meet compliance requirements at affordable costs,” Sitharaman said.

 

The FM further proposed a scheme to revive 200 legacy industrial clusters to improve their cost competitiveness and efficiency through infrastructure and technology upgradation.