Ahead of 2026-27 Budget: MSMEs seek better credit access, safeguards against exchange rate risks, tariff shocks

“Micro enterprises today are operating under extraordinary stress — not due to inefficiency, but due to policy asymmetry, external shocks, and structural neglect. While India aspires to become a global manufacturing and export hub, the smallest units that feed the supply chain are being systematically weakened. Unless decisive, budget-backed interventions are announced in Union Budget 2026–27, a large section of micro enterprises will silently exit, causing irreversible damage to employment and domestic manufacturing capacity,” KE Raghunathan, Founder Chairman, AIE said in the letter.

The MSMEs are seeking simplified compliance norms from the government in the form of higher exemption thresholds and a single simplified GST return for micro units. They have also sought time-bound GST refunds within 15 days with statutory interest for government delays. “Complete decrimina­lis­ation of procedural lapses — no prosecution for minor errors. Unified Annual Compliance Return replacing multiple filings under GST, labour, and local laws,” the letter stated.

Given the global tariff war, the AIE has also sought coverage from exchange rate shocks, recommending a forex fluctuation protection scheme for micro enterprises with limited hedging capacity. The MSMEs have also suggested that the Reserve Bank of India could consider simplified hedging instruments with subsidised cost for micro units.

Micro enterprises are the first to be hit and last to be supported during global disruptions, Raghunathan said, adding that there should be an ‘Emergency Working Capital Window’ when wars disrupt raw materials, fuel, and shipping routes. The Association has also suggested a freight equalisation subsidy for micro exporters during abnormal container shortage and freight volatility along with priority access to containers for micro exporters through public sector shipping companies and ports.