In the three-pronged 'Kartavya' framework of the Union Budget, encompassing a six-point agenda to accelerate the economy, Sitharaman stressed the need for "rejuvenating legacy industrial sectors" and creating "champion MSMEs", in line with the aim to ensure long-term security and stability.  

The country has close to six crore MSMEs, which employ more than 25 crore people.

Official data show that the total number of exporting MSMEs in 2024-25 increased more than 1.73 lakhs in 2024-25. These MSMEs accounted for 45.8% of total exports last year.

MSME Sector

The MSME sector players had emphasised faster and more transparent clearance systems, improved credit flow for contractors and MSME suppliers, and a policy push towards safety compliance. With digitalisation, trust-based clearances, technological advancements, and tax reforms, the Budget 2026-27. The Budget also mandated the Trade Receivables Discounting System (TReDS) as the transaction settlement platform for all purchases from MSMEs by CPSEs.

Budget 2026 is a progressive step for MSMEs and manufacturing. By strengthening TReDS as a pricing benchmark and settlement platform, the government has directly addressed a long-standing working capital challenge for small businesses. The MSME Growth Fund and the enhanced Self-Reliant India Fund further improve access to capital and growth opportunities

— Manish Shah, MD & CEO, Godrej Capital

With the easing of compliance norms and the thrust on infrastructure development through the capital expenditure target of ₹12.2 lakh crore, the MSME sector, which accounts for about 30% of the GDP, is set to overcome challenges that have been hindering its growth. But the budget has set only a roadmap, and the real test lies in effective implementation.

"MSMEs play a key role in manufacturing for the defence sector. Supporting them with the ₹10,000 crore SME Growth Fund, and the ₹2,000 crore top-up of the Self-Reliant India Fund will not only help them maintain liquidity and hedge risk, but also enable them to augment their capabilities to innovate for the sector," says Subbu Venkatachalam, Head of Defence & Aerospace, Carborundum Universal Limited.

Technology Adoption

In the run-up to the Budget, experts and industry voices emphasised the importance of technology adoption to reduce the burden of compliance on the sector. It is not just higher output volumes, but reduced compliance and enhanced competitiveness that enable the small and emerging units to scale up their business.

Access to next-generation engineering tools can significantly improve precision, productivity, and time-to-market for MSMEs and mid-sized manufacturers. Policy support that accelerates the adoption of digital manufacturing technologies will reduce import dependence and enhance global competitiveness

— An analyst 

"A budget that aligns manufacturing policy with innovation and skill development will help Indian companies compete on quality, speed, and technology—positioning India as a serious global manufacturing and engineering hub," he said.