Budget 2026 boosts startups, MSMEs with ₹10,000 crore funds, credit push

FM Nirmala Sitharaman announced a ₹10,000 cr SME Growth Fund and additional credit and equity support for micro enterprises and startups to cushion them against global economic uncertainty

What support does Budget 2026-27 offer startups and small businesses?

 

India’s Union Budget for 2026–27 outlined a series of measures aimed at startups and small businesses, with a focus on improving access to funding and credit, supporting manufacturing, and easing regulatory burdens. Finance Minister Nirmala Sitharaman announced a Rs 10,000 crore SME Growth Fund for the micro, small and medium enterprises sector, as global trade and economic uncertainties continue to weigh on the industry.

 

“I propose to revive 200 legacy industrial clusters… introduce a Rs 10,000 crore SME Growth Fund,” Sitharaman said.

 

She also proposed topping up the Self-Reliant India Fund, set up in 2021, with Rs 2,000 crore to continue support for micro enterprises and maintain their access to risk capital.

 

 

The emphasis builds on recent policy efforts to expand the MSME sector, which has emerged as a key driver of employment and industrial output. As of the previous Budget, the Udyam Registration Portal had recorded more than 5.9 crore registered MSMEs.

 

Sitharaman also announced a new Rs 10,000 crore Fund of Funds to broaden support for startups, alongside a lending programme aimed at five lakh first-time women, Scheduled Caste and Scheduled Tribe entrepreneurs, offering term loans of up to Rs 2 crore over five years.

 

How has industry responded to the Budget’s MSME and startup measures?

 

Various industry leaders, investors and startup executives welcomed the initiatives.

 

“Union Budget 2026 is a positive step for India’s growth trajectory,” said Flipkart Group Chief Executive Officer Kalyan Krishnamurthy. “Its focus on digital public infrastructure, simpler compliance, MSME financing, and productivity-enhancing infrastructure strengthens the foundations of a more inclusive and formal digital economy.”

 

Vidit Aatrey, co-founder, managing director and CEO at e-commerce firm Meesho, said the Union Budget 2026–27 reflects a clear shift from isolated support measures to an ecosystem-led approach for Indian MSMEs and digital commerce. He said initiatives such as the Rs 10,000 crore SME Growth Fund, deeper integration of the Trade Receivables Discounting System (TReDS) with the Government e-Marketplace (GeM), and stronger credit guarantees will meaningfully ease working capital constraints for small sellers, particularly in Tier II and Tier III markets where e-commerce is growing rapidly.

 

“The emphasis on logistics infrastructure, cluster modernisation, and cost-efficient supply chains is critical to improving efficiency and lowering cost-to-serve,” Aatrey said. “The continued focus on strengthening the MSME ecosystem, including targeted efforts to encourage women entrepreneurs, will help broaden participation and deepen livelihood creation across regions.”

 

Beyond MSMEs, Aatrey said the Budget’s focus on strengthening core technology infrastructure, including data centres and cloud capacity, is an important enabler for the broader economy. By lowering the cost of domestic digital infrastructure, he said, these measures will support wider adoption of AI-driven tools and advanced technologies across businesses of all sizes. “Taken together, the Budget lays the foundation for a more resilient, inclusive, and scalable growth ecosystem,” he added.

 

How do these measures affect jobs, skilling and the wider economy?

 

Pavan Guntupalli, co-founder of ride-hailing firm Rapido, said the Union Budget’s focus on skilling, tourism, and the development of Tier II and Tier III cities strongly aligns with Rapido’s mission of enabling dignified livelihoods at scale. As India’s growth increasingly shifts beyond metros, he said platforms like Rapido play a critical role in connecting people to work, markets and opportunities.

 

“By empowering local youth with flexible earning options and supporting last-mile mobility in emerging tourism and economic hubs, we are helping translate infrastructure and skilling investments into real, on-ground impact,” Guntupalli said.

 

Sai Pramodh, vice-president (investments) at BlackSoil, said this year’s Budget gets the MSME playbook right by moving beyond short-term relief to structural reform. He said the Rs 10,000 crore SME Growth Fund, the Rs 2,000 crore top-up to the Self-Reliant India Fund, along with enhanced credit and equity support through systemic reforms such as TReDS and CGTMSE linkages, directly strengthen MSME working capital.

 

What does the Budget signal for deep tech and digital infrastructure?

 

Shyam Menon, co-founder at Bharat Innovation Fund, said the Budget marks a decisive shift in India’s startup story, moving from “digital adoption” to “deep science innovation”. He said the explicit proposal for a Deep Tech Fund of Funds, combined with the Rs 20,000 crore allocation for private sector-driven R&D, addresses a long-standing gap.

 

“Deep tech requires patient capital to bridge the ‘lab-to-market’ gap. By backing this with 10,000 PM Research Fellowships and a new AI Centre of Excellence, the government is simultaneously helping solve for both capital and high-quality talent,” Menon said.

 

Rohit Bansal, co-founder of Titan Capital and Snapdeal, and promoter of Unicommerce, said that amid the manufacturing and capex focus in Budget 2026, one policy stood out: a tax holiday till 2047 for global cloud companies running data centres in India.

 

“This is a big deal. This exempts global-facing data centre income from Indian income tax for over two decades,” Bansal said. “Data centres involve high upfront capex, long gestation periods, and returns that are extremely sensitive to taxation, power costs, and utilisation certainty.”

 

He said a near 20-year tax holiday materially changes the economics, improving project internal rates of return, compressing payback periods, and meaningfully de-risking large capex decisions. This, he added, builds on India’s existing advantage of a deep pool of engineering and operations talent at globally competitive costs.

 

He said the downstream impact is equally important. Hyperscale data centres anchor high-quality jobs across construction, electrical and cooling systems, network engineering, cybersecurity, and long-term facility operations. Each large campus also catalyses local ecosystems spanning renewable power, transmission infrastructure, fibre networks, hardware supply chains, and managed services.

 

“Few fiscal measures combine long-term capital attraction, skilled job creation, and export competitiveness as cleanly as this one,” Bansal said.