Union Budget 2026: Nirmala Sitharaman Announces ₹10,000 Crore SME Growth Fund, Boosts MSME Liquidity
UNION BUDGET PROPOSES 4 MEASURES TO LEVERAGE FULL POTENTIAL OF TReDS FOR LIQUIDITY SUPPORT TO MSMEs
The Impressive TimesNew Delhi, February 1, 2026: Presenting the Union Budget for 2026–27 in Parliament, Finance Minister Nirmala Sitharaman unveiled a series of major initiatives aimed at strengthening India’s Micro, Small and Medium Enterprises (MSME) sector, describing it as a key pillar of economic expansion and job creation.
Highlighting the government’s commitment to steady reforms and long-term growth, the Finance Minister said policy decisions are being guided by a sense of national duty, with the foremost priority being faster and more resilient economic development amid global uncertainties.
As part of a broader strategy to nurture high-potential enterprises, the government will establish a dedicated ₹10,000 crore SME Growth Fund. This fund will focus on identifying and supporting promising small and medium businesses based on defined performance and growth criteria, helping them scale into globally competitive firms.
In addition, the Self-Reliant India Fund, originally launched in 2021 to provide equity support to smaller businesses, will receive an additional ₹2,000 crore infusion. This move is intended to ensure continued access to risk capital for micro enterprises.
To improve cash flow for small businesses, the Budget also focuses on expanding the reach and effectiveness of the Trade Receivables Discounting System (TReDS), which has already facilitated financing worth over ₹7 lakh crore for MSMEs.
The Finance Minister announced four key measures to deepen its impact:
Mandatory Use by CPSEs: All Central Public Sector Enterprises will be required to use TReDS as the standard platform for settling payments related to purchases from MSMEs, setting a model for private companies to follow.
Credit Guarantee for Invoice Discounting: A credit guarantee facility under CGTMSE will be introduced to support invoice discounting on the TReDS platform, reducing risk for lenders and improving credit flow.
Integration of GeM and TReDS: The Government e-Marketplace (GeM) will be digitally linked with TReDS, allowing financiers to access data on government procurement from MSMEs and enabling faster, lower-cost financing.
Secondary Market for Receivables: MSME receivables processed through TReDS will be developed into asset-backed securities, paving the way for a secondary market and improving overall liquidity in the system.
Recognising that many small businesses struggle with regulatory and financial compliance, the government also proposed a professional support network. Leading professional bodies such as ICAI, ICSI and ICMAI will design short-duration, modular training programmes to create a pool of trained “Corporate Mitras.”
These accredited para-professionals, especially in smaller cities and towns, will assist MSMEs with compliance, documentation and financial processes at reasonable costs, reducing their operational burden and improving formalisation.
Through these combined measures — equity infusion, improved access to working capital, and professional guidance — the government aims to transform MSMEs into stronger growth drivers for the Indian economy.
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