The Union Budget for FY 2026-27 will be presented by Finance Minister Nirmala Sitharaman on February 1. The budget will lay the blueprint for India's economy in the months to come.
In 2025, FM Sitharaman gave a much-awaited incentive to Indian taxpayers. The Union government made incomes up to Rs 12 lakh annually tax-free. The non-taxable income limit was increased to Rs 12.75 lakh per annum after standard deduction for the salaried section.
The Union Budget comes at a time when US President Donald Trump is imposing tariffs on several countries, India included. This global pressure adds to the importance of the upcoming Budget.
In recent years, the government has tried to balance welfare schemes with sector-focused steps and infrastructure spending, while keeping economic growth steady. From salaried individuals to small-business owners, hopes are high for the budget this year, as prices rise steadily.
The changing nature of MSME operations
More than 6.8 crore MSMEs are registered on the Udyam Registration Portal and the Udyam Assist Platform, as of September last year, Moneycontrol reported. Together, they employ close to 30 crore people.
The operations of MSMEs have also changed, with formalisation setting in and growth in the use of digital services. Nearly three out of four MSME transactions are now digital. UPI has driven much of this shift, with monthly transactions crossing 20 billion for the first time in August 2025. This shows how small firms now handle payments, cash flow, and banking in new ways.
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Concerns surrounding the MSME sector
Industry bodies say MSMEs want cheaper and faster credit in Budget 2026. Many small businesses still struggle with working capital and delayed GST refunds, which block cash flow. Groups like FISME have asked for simpler taxes and quicker refunds to help MSMEs grow and invest, according to Moneycontrol.
MSME associations have also raised concerns about heavy compliance and regulatory pressure. They want easier rules, higher loan limits under schemes like Mudra, and more interest support.
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What business leaders say
Keshab Kumar Halder, Managing Director, Halder Venture Ltd said, "MSMEs generate nearly 60 per cent of India's employment, yet the sector is steadily weakening. If urgent attention isn’t given to MSMEs, we risk losing one of the biggest engines of economic growth."
He added, "While steps like tax and GST reductions have helped improve consumer purchasing power, they are not enough. Middle and lower-middle-class businessmen, the backbone of MSMEs, are struggling to survive under complex compliance and weak policy execution. Good policies mean nothing without clear communication, strong implementation, and real on-ground support."
Halder further said, "Without this 'oxygen,' the MSME sector will simply collapse."
