Budget 2026-27: PHDCCI calls for easier credit access and lower compliance costs for MSMEs

The PHD Chamber of Commerce and Industry (PHDCCI) has presented a comprehensive set of recommendations for Union Budget 2026-27, emphasizing that Micro, Small and Medium Enterprises (MSMEs) are critical to placing India on a 10% economic growth trajectory. The chamber's proposals focus on easing credit access, reducing compliance burdens, and strengthening institutional support mechanisms for the sector.

MSME Sector's Growing Economic Contribution

The MSME sector has demonstrated remarkable growth and integration into India's economic framework. According to PHDCCI, the sector contributed 30% to India's manufacturing output in 2025 and has emerged as the second-largest employer after agriculture. The sector's export performance has shown consistent improvement, with the following trajectory:

This upward trend highlights the increasing integration of MSMEs into global trade and value chains, underlining the need for targeted policy interventions to sustain this momentum.

Accelerated Formalization Through Digital Platforms

Ranjeet Mehta, CEO & Secretary General of PHDCCI, noted that more than 7.30 crore enterprises have registered on the Udyam Registration Portal and the Udyam Assist Platform between July 2020 and December 2025. This massive formalization drive has brought a large number of MSMEs into the organized sector, enabling more structured and targeted implementation of government schemes and policies.

Key Budget Recommendations for Credit Access

PHDCCI has proposed several measures to address the high cost of credit faced by MSMEs:

Interest Subvention Scheme: The chamber called for reintroducing an interest subvention scheme offering a 2% interest subsidy on new and incremental loans from banks and non-banking financial companies (NBFCs).

MUDRA Loan Limit Revisions: Citing rising project costs since the scheme's 2015 launch, PHDCCI recommended significant increases in loan ceilings:

Export Support and Equity Infusion Measures

To support MSME exporters amid rising global tariff pressures, the chamber proposed reintroducing the Interest Equalisation Scheme on pre- and post-shipment export credit. The recommendation includes extending eligibility to service exporters, in addition to manufacturing exporters.

PHDCCI also called for equity infusion through the Fund of Funds, particularly targeting start-ups to meet seed capital requirements. Additionally, it recommended expanding the scope of MSME Facilitation Councils under the MSME Development Act, 2006, to allow medium enterprises to seek relief in cases of delayed payments.

Technology Upgradation and Compliance Relief

The chamber proposed enhancing the Credit-Linked Capital Subsidy Scheme by raising the investment ceiling from ₹1.00 crore to ₹2.00 crore to promote adoption of modern and eco-friendly technologies.

For compliance relief, PHDCCI sought amendments to Section 44AB of the Income Tax Act to exempt all micro enterprises with turnover up to ₹10.00 crore from mandatory tax audits, irrespective of profit margins, citing high compliance costs as a burden on small businesses.

PHDCCI emphasized that these Union Budget 2026-27 recommendations focus on improving access to finance, reducing regulatory burden, and strengthening institutional mechanisms to support the MSME sector's continued growth and contribution to India's economic development.