Union Budget 2026–27: PHDCCI proposes loan subsidy, export support to boost MSMEs

The PHD Chamber of Commerce and Industry (PHDCCI) presented proposals to the government to provide strong support to Micro, Small and Medium Enterprises (MSMEs) in the Union Budget 2026–27, calling for easier access to loans at lower interest rates and a reduction in regulatory burden to help small businesses cut costs and grow faster.

In a statement issued on Wednesday, PHDCCI said MSMEs are the backbone of India’s economy. These businesses create jobs, boost exports, and support manufacturing. According to the chamber, MSMEs can help India reach a 10 per cent growth rate if they receive the right policy support, IANS reported.

The MSME sector’s share in manufacturing, exports, and job creation has been rising steadily. Contribution of MSMEs in manufacturing in India peaked at almost 30 per cent in 2025. They are now the second-largest job provider in the country after agriculture.

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More than 7.30 crore small and micro businesses have registered on the Udyam Registration Portal and Udyam Assist Platform between July 2020 and December 2025. This has helped bring many businesses into the formal system, making it easier for the government to create focused schemes and support plans.

Easier loans and lower interest rates for MSMEs

PHDCCI urged the government to bring back the interest subvention scheme for MSMEs. This would significantly cut the cost of borrowing and encourage businesses to invest in expansion, as they would receive a 2 per cent interest subsidy through this proposal on their new and additional loans taken from banks and NBFCs.

The chamber also said that project costs have increased since the Pradhan Mantri MUDRA Yojana started in 2015. Because of this, loan limits under the scheme should be raised so that small businesses can meet today’s higher expenses.

To support exporters, PHDCCI wants the Interest Equalisation Scheme on export credit to be restarted. This scheme helps lower loan costs for exporters before and after shipment. The chamber also suggested that service exporters should be included along with manufacturing exporters. This would help Indian businesses compete better in global markets.

PHDCCI CEO and Secretary General Ranjeet Mehta said the proposals aim to make finance easily available, cut red tape, and strengthen support systems for MSMEs.

Support for startups, green technology and faster growth

The chamber also stressed the need for cheaper funding options for startups. It suggested using the Fund of Funds to provide equity support, especially for seed capital. This will help new businesses grow without heavy loan pressure.

To promote modern and eco-friendly technology, PHDCCI wants the Credit-Linked Capital Subsidy Scheme limit to be raised from Rs 1 crore to Rs 2 crore. The current limit no longer matches today’s technology costs.

Another factual requirement is an appeal to medium-sized enterprises seeking redress through the Conciliation Councils for defaulted payment. Currently, only small businesses get this protection under the MSME Development Act, 2006.

Tax relief and reduced compliance burden

PHDCCI has also asked for changes in income tax rules. It wants micro enterprises with turnover up to Rs 10 crore to be exempt from mandatory tax audits, regardless of profit levels. This could save businesses between Rs 75,000 and Rs 1.5 lakh every year in compliance costs.

The chamber holds that these measures will lead to the reduction of financial stress, an increase in competitiveness, and the creation of new jobs, thereby reinforcing the MSME sector of India in the near future.

With inputs from agencies.