FY27 Budget should support MSME exports, fund critical minerals: Deloitte

The FY27 Budget should look at measures like supporting MSMEs through export credit and concessional financing, as well as funding exploration of critical minerals to enhance trade resilience and reduce external vulnerabilities, Deloitte India has said.

In its Budget expectation, Deloitte said that MSMEs account for 46 per cent of India's exports and are the second largest employer after agriculture.

Easing financial and compliance pressures will help these enterprises navigate global volatility, sustain production and remain competitive in international markets.

"Strengthening MSMEs will safeguard jobs and drive inclusive economic growth, boost rural incomes and support India's ambition to become a global manufacturing hub," it said.

 

Deloitte suggested a comprehensive training to improve the last-mile competitiveness of MSMEs and reduce compliance burden through simplified digital processes.

It also suggested that targeted export incentives or enhanced duty drawback be provided to tariff-sensitive sectors (ready-made garments, gems, jewellery, leather).

Deloitte Economist Rumki Majumdar said that rising global protectionism and ad-hoc measures (tariff hikes, rules-of-origin changes and non-tariff barriers) add uncertainty for Indian exporters. The direct impact of global trade frictions on GDP growth could be limited to 40-80 basis points, but the spillover effect on MSMEs and employment could be significant.

"MSMEs contribute 30.1 per cent to GDP, account for 45.79 per cent of India's exports and employ nearly 290 million people; disruptions in export markets or tightening trade rules pose serious risks to jobs and income stability," Majumdar said.

To secure critical minerals and ensure access to alternative energy supplies, Deloitte suggested allocation for a dedicated critical minerals fund to finance overseas acquisitions and technology collaborations.

It also suggested a global collaboration with Africa, Australia and Latin America to secure upstream access and joint R&D in mineral processing and recycling, besides incentivising investments in renewable energy, green hydrogen and grid-scale storage.

Also, it said that measures like expanded funding for exploration, extraction and processing of critical minerals such as lithium, cobalt and rare earth magnets are necessary to secure such resources.