Union Budget 2026 measures could unlock Rs 8 1 lakh cr stuck MSME capital - Crisil
A recent report by Crisil Intelligence noted that measures on receivables financing, equity infusion and compliance easing could unlock stalled working capital and improve credit flow to MSMEs.
Union Budget 2026 has sharpened its focus on easing liquidity stress and improving access to capital for micro, small and medium enterprises (MSMEs), with a series of measures aimed at unlocking delayed payments, deepening receivables financing and strengthening equity support, according to a latest report by Crisil Intelligence.
MSMEs account for nearly 30% of India’s GDP and about 45% of exports, while employing over 32 crore people as of January 2026. Yet, liquidity constraints remain acute, with delayed payments estimated at Rs 8.1 lakh crore, choking working capital and raising borrowing costs.
Credit access and receipt of timely payments have been major challenges for MSMEs over the years, with an estimated Rs 8.1 lakh crore locked in delayed payments, blocking working capital. To address these concerns, the budget has introduced measures to enhance traction on the Trade Receivables Discounting System (TReDS) platform, the report stated.
TReDS mandate seen unlocking stuck capital
A key budget intervention is making the Trade Receivables Discounting System (TReDS) a mandatory settlement platform for all central public sector enterprises (CPSEs). The report said that this move could materially improve cash flows for MSMEs by accelerating receivables realisation and lowering financing costs.
Since inception, TReDS has facilitated financing of over Rs 5 lakh crore of receivables, with volumes rising 69% year-on-year to Rs 2.33 lakh crore in FY25. As of October 2025, the platform had nearly 1.72 lakh registered MSME sellers and over 10,000 buyers. The invoice-financing success rate improved to 95.3% in FY25, following mandatory onboarding of large companies.
The budget has also proposed enabling invoice discounting under the Credit Guarantee Fund Trust for Micro and Small Enterprises. The report highlighted that this move could increase banks’ appetite for trade receivables by lowering credit risk. Further, recognising TReDS receivables as asset-backed securities is expected to optimise banks’ regulatory capital and free up lending capacity, although Crisil cautioned that structuring and execution risks in short-term securitisation would need close monitoring.
Integration of TReDS with the Government e-Marketplace is expected to improve information flow between government buyers and financiers, facilitating faster and more cost-effective financing for MSMEs supplying to public entities.
Equity support and ease-of-doing-business measures
On the equity side, the introduction of a Rs 10,000-crore SME growth fund, with Rs 500 crore allocated for FY27, is expected to support scaling of high-potential enterprises, though implementation details and selection criteria will be key to its effectiveness, the report revealed.
The budget has also proposed increasing the government’s contribution to the Self-Reliant India Fund by Rs 2,000 crore, taking it to Rs 12,000 crore. Since its launch in 2020, the fund has invested Rs 16,260 crore across 693 MSMEs, providing long-term growth capital to smaller firms.
Complementary measures such as the Corporate Mitra initiative for capacity-building, the launch of Self-Help Entrepreneur (SHE) Marts to improve market access for women-led enterprises, removal of the Rs 10 lakh per consignment cap on courier exports and automated issuance of lower or nil TDS certificates are expected to ease compliance burdens and expand market opportunities, Crisil said.
Sector-specific measures, including duty-free imports of certain inputs and extended export timelines for leather products, are likely to benefit MSME-heavy industries by lowering costs and improving operational flexibility.
Banks, NBFCs and broader credit transmission
The report highlighted that the budget also nudges banks and non-banking financial companies to play a larger role in addressing MSME liquidity challenges, while laying the groundwork for infrastructure financing through the proposed Infrastructure Risk Guarantee Fund with an allocation of Rs 1,000 crore.
The proposed high-level committee on banking and a strategic roadmap for NBFCs, particularly public sector NBFCs, signal a shift towards strengthening governance, improving efficiency and aligning the financial sector with long-term growth objectives. Measures such as a market-making framework for corporate bonds and access to derivative instruments are expected to improve liquidity and risk management in debt markets, complementing bank-led credit growth.
Overall, the report noted that the budget marks a meaningful step towards easing structural funding constraints for MSMEs by combining receivables financing reforms, equity support and compliance simplification, though execution and monitoring will be critical to delivering sustained impact.