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PHDCCI Urges Budget 2026-27 Focus on MSME Growth

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  Published in Business and Finance on Wednesday, January 7th 2026 at 8:49 GMT by The Hans India
      Locale: INDIA

PHDCCI Urges Government for MSME Boost in Budget 2026-27, Focusing on Credit Access, Digitalization & Global Competitiveness

The PHD Chamber of Commerce and Industry (PHDCCI) has issued a comprehensive set of pre-budget recommendations for the Union Budget 2026-27, strongly advocating for targeted incentives to accelerate the growth of India's crucial Micro, Small & Medium Enterprises (MSME) sector. Recognizing MSMEs as the backbone of the Indian economy – contributing significantly to GDP, employment, and innovation – PHDCCI argues that focused policy interventions are vital to unlock their full potential and propel India towards a $5 trillion economy. The recommendations, detailed in a press release and subsequent statements, cover a broad spectrum of issues including access to credit, digitalization, technology adoption, skill development, export promotion, and reduction of compliance burden.

Key Demands: Addressing Credit Constraints & Financial Access

A central theme of PHDCCI’s recommendations revolves around improving access to affordable credit for MSMEs. They highlight that despite various government schemes, many MSMEs, particularly those in rural areas and belonging to marginalized communities, continue to face challenges securing funding. The chamber specifically requests an increase in the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) coverage, which provides a guarantee to banks for loans extended to MSMEs. Expanding this coverage would encourage banks to lend more confidently to smaller businesses perceived as higher risk.

Further, PHDCCI urges the government to explore innovative financing mechanisms like invoice discounting, supply chain financing, and factoring, facilitated through digital platforms. They emphasize the need for a streamlined process for collateral-free loans, especially for women entrepreneurs and startups. The recent establishment of the Digital India Credit Guarantee Scheme (DICGS), intended to facilitate loans to digital lenders, is seen as a positive step, but PHDCCI stresses that its implementation needs to be efficient and reach a wider network of MSMEs.

Digital Transformation & Technology Adoption: A Critical Imperative

Recognizing the power of digitalization, PHDCCI advocates for enhanced support for MSMEs to embrace digital technologies. They propose incentivizing the adoption of technologies like Artificial Intelligence (AI), Machine Learning (ML), Cloud Computing, and the Internet of Things (IoT). This includes providing subsidies for software and hardware purchases, as well as funding for digital literacy and skill development programs.

A key component of this push is improving digital infrastructure in rural areas. Reliable and affordable internet connectivity is crucial for MSMEs to access online markets, manage their operations efficiently, and connect with suppliers and customers. PHDCCI calls for increased investment in broadband infrastructure and a reduction in data costs. The government’s Champion OE (Online Export) portal, designed to facilitate MSME exports, is viewed favorably, but the chamber believes greater awareness and support are needed to maximize its utility.

Enhancing Global Competitiveness & Export Potential

PHDCCI argues that empowering MSMEs to compete globally is essential for sustainable growth. They recommend rationalizing export duties and streamlining export procedures. Reducing logistical costs, simplifying documentation requirements, and providing access to export credit insurance are also key demands.

The chamber suggests strengthening the Trade Infrastructure for Export Scheme (TIES) and the Market Access Initiative (MAI) schemes to provide financial assistance to MSMEs for participating in international trade fairs and exploring new markets. They also emphasize the importance of negotiating favorable trade agreements with key trading partners, ensuring that MSMEs benefit from reduced tariffs and improved market access. PHDCCI actively promotes the concept of “Make in India for the World,” encouraging MSMEs to focus on producing high-quality, globally competitive products.

Reducing Compliance Burden & Simplifying Regulations

MSMEs often struggle with a complex web of regulations and compliance requirements. PHDCCI requests a significant simplification of these processes, advocating for a unified regulatory framework and a single-window clearance system. This includes streamlining GST filings, reducing the number of inspections, and promoting self-certification.

The chamber also highlights the need for a review of labour laws to make them more flexible and conducive to business growth, while ensuring the protection of workers' rights. A streamlined and transparent regulatory environment would reduce the administrative burden on MSMEs, allowing them to focus on innovation and expansion.

Skill Development & Entrepreneurship Promotion

Recognizing the skill gap as a major constraint, PHDCCI emphasizes the need for targeted skill development programs tailored to the needs of MSMEs. This includes promoting vocational training, apprenticeships, and entrepreneurship education.

They suggest strengthening the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and the National Entrepreneurship Development Board (NEDB) to provide MSMEs with access to skilled manpower and entrepreneurial support. Promoting innovation and startups within the MSME sector through incubators, accelerators, and seed funding is also a key recommendation.

In conclusion, PHDCCI’s pre-budget recommendations paint a comprehensive picture of the support needed to revitalize the MSME sector. By addressing critical challenges related to credit access, digitalization, export promotion, regulatory simplification, and skill development, the chamber believes the government can unlock the enormous potential of MSMEs and drive inclusive and sustainable economic growth. The success of these recommendations will hinge on effective implementation and a collaborative approach between the government, industry, and financial institutions.