Small businesses across India are sounding the alarm ahead of the 2026-27 Union Budget, pressing the government to introduce urgent relief measures for micro, small and medium enterprises (MSMEs) grappling with rising costs and shrinking export demand. Representatives of the sector told officials that some units — particularly those linked to the United States market — are struggling after a slump in orders following steep US tariffs on Indian goods, which has hit labour-intensive industries such as textiles, gems and jewellery, and fisheries especially hard.
At a pre-Budget consultation chaired by Finance Minister Nirmala Sitharaman, MSME industry leaders proposed a series of financial supports. One of their most prominent demands was for a temporary loan moratorium — akin to the one granted during the COVID-19 pandemic — that would allow affected businesses to pause repayments until trade uncertainties, including US tariff negotiations, are resolved. They argued that such a break could prevent a wave of defaults and give vulnerable firms breathing space.
Aside from moratorium relief, the sector also emphasised the perennial challenge of slow payments from buyers. MSME delegates stressed that delays in settling invoices — a longstanding frustration for small suppliers — are compressing cash flows and making it harder to manage working capital. They called for faster, more reliable payment cycles, including strengthening rules to ensure buyers pay within 45 days after delivery — a provision introduced in the 2023-24 Budget that many say has not been fully implemented in practice.
Industry leaders also pitched for expanded access to credit and easier financing for modernization and machinery upgrades to boost competitiveness. They pointed out that medium-sized buyers generally do not delay payments or face capital crunches, but smaller firms often struggle because banks are reluctant to lend without robust collateral — even as broader liquidity challenges persist.
The discussion took place against the backdrop of efforts by the government to support exporters affected by global trade disruptions through initiatives such as the Export Promotion Mission — a six-year, ₹25,000-crore plan approved by the Union Cabinet. Additional credit lines of up to ₹20,000 crore have also been extended to exporters, helping relieve some pressure on external markets.
As policymakers prepare the next Budget, MSMEs contend that targeted relief — including moratoriums, payment enforcement mechanisms, and financing support — could help safeguard India’s broad base of small businesses and stimulate recovery in export-linked segments.