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Union Budget: Rs 10,000-crore SME Growth Fund, reform to boost liquidity for MSMEs

Sitharaman also said the government will make affordable professional help available for MSMEs so that these companies can comply with regulatory requirements at affordable costs.

MSMEs have long borne the brunt of excessive regulatory requirements, reduces their competitiveness. (Express Photo)

3 min readNew DelhiFeb 2, 2026 06:15 AM IST First published on: Feb 2, 2026 at 06:15 AM IST

Aiming to improve the liquidity for Small and MediumEnterprises (SME), Union Finance Minister Nirmala Sitharaman announced a Rs 10,000 crore SME Growth Fund to ensure timely payments to SMEs.

“I propose to introduce a dedicated Rs 10,000 crore SME Growth Fund, to create future Champions, incentivising enterprises based on select criteria. I also propose to top up the Self-Reliant India Fund set up in 2021, with Rs 2,000 crore to continue support to micro enterprises and maintain their access to risk capital,” Sitharaman said while presenting the Budget.

She also proposed four measures to maximise the potential of the Trade Receivables Discounting System (TReDS) platform — mandating it as the transaction settlement platform for all purchases that central power sector companies make from MSMEs, introducing a Credit Guarantee Support Mechanism (CGTMSE) through the credit guarantee fund trust for MSMEs for invoice discounting on the platform.

It thereby links the Government E-marketplace with the platform for information sharing with financiers about government purchases from MSMEs, in turn encouraging cheaper and quicker financing, and introducing TReDS receivables as tradeable asset-backed securities.

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“The enhancement of CGTMSE is directionally supportive, but its impact will ultimately depend on improved receivable flows — where TReDS becomes critical. The mandatory onboarding of CPSEs and large buyers on TReDS under Budget 2026-27 should strengthen payment discipline and enhance the effectiveness of credit guarantees by reducing cash‑flow unpredictability,” said Neermoy Shah, Associate Director, India Ratings & Research.

The TReDS platform, introduced as a concept by the Reserve Bank of India (RBI) in 2014 and later becoming operational in 2018, is used by MSMEs to discount invoices and cash-in on trade receivables.

This helps the smaller companies with limited cash flows to improve liquidity and cope against issues such as delayed payments from buyers without the requirement of a collateral.

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Sitharaman also said the government will make affordable professional help available for MSMEs so that these companies can comply with regulatory requirements at affordable costs. This will be done by facilitating institutions such as Institute of Chartered Accountants of India, Institute of Company Secretaries of India, and Institute of Cost Accountants of India to design short-term modular courses and practical tools to develop ‘Corporate Mitras’, especially in Tier-II and Tier-III cities. “ These accredited para-professionals will help MSMEs meet compliance requirements at affordable costs,” she said.

MSMEs have long borne the brunt of excessive regulatory requirements, with Comptroller and Auditor General (CAG) K Sanjay Murthy on Thursday raising concern that this burden reduces the competitiveness of these smaller companies. “We need a 4-pronged strategy of Simplification, Digitalisation, Decriminalisation, and Elimination of redundant laws—all of which are highly relevant for MSMEs,” the CAG said in a press release.