With the Budget around the corner, the MSME industry has asked the finance ministry for relief in terms of taxes and better access to credit. In a letter written to the Finance Ministry by the Association of Indian Entrepreneur, the major demand of the association is the access to statutory collateral-free lending up to Rs 10 crore for micro enterprises with interest capped at 6–7%.
The association also highlighted that the micro enterprises have been particularly hit by the recent geo-political turmoil and tariff situations and despite several measures being announced by the government, there has been little on-ground visible impact for the micro enterprises.
The association requested for an Export Risk Equalisation Fund to compensate micro exporters impacted by sudden tariff hikes and temporary duty drawback enhancement and interest relief during tariff shocks.
The MSME industries expect the government to ease credit constraints for micro enterprises in next year’s Budget. Among their other demands include automatic renewal of working capital limits for GST-compliant units, dedicated micro-lending targets for SIDBI and public sector banks, built-in interest subvention during stress phases, and interest-free loans to support import-substitution projects.
The Union Budget 2025-26 had unveiled a raft of measures to improve credit flow to MSMEs including a credit guarantee cover for micro and small enterprises that was raised to Rs 10 crore from Rs 5 crore and a guaranteed cover of Rs 20 crore for start-ups, with a reduced fee of 1% for loans in 27 priority sectors. A Udyam-linked credit card scheme was also announced. However, small businesses feel that these didn’t bring any visible changes for them.
“Policy decisions are often taken without impact assessment on micro enterprises, leading to rollbacks and chaos. We propose formation of a Micro Enterprises Council under the Ministry of MSME and mandatory micro-impact assessment before rollout of major fiscal, trade, or regulatory policies,” stated KE Raghunathan, national chairman of Association of Indian Entrepreneurs, said in the letter sent to the ministry.
While under the recent GST reforms, the government has eased several regulations to reshape business compliance and refund processes. However, the association demands higher GST exemption thresholds and a single simplified GST return for micro units and time-bound GST refunds (within 15 days) with statutory interest for Government delays.