CHENNAI: The Union Budget 2026-2027 has evoked disappointment from the Micro, Small and Medium Enterprises (MSME) sector over inadequate allocations and the absence of measures to address their long-standing challenges.
Tirupur Exporters and Manufacturers Association president Munirathinam said the budget wasn't helping MSMEs, amid the jolt the business sector has suffered from US tariffs. He stated that the knitwear industry has seen no progress for the past four months due to the 50% tariff imposed by the United States.
The MSME sector expressed disappointment over the sharp reduction in budgetary allocation from Rs 22,000 crore in the previous budget to Rs 10,000 crore towards the SME growth fund, while terming it grossly inadequate.
“The MSMEs expected one per cent of its contributory GDP, estimated at around Rs 3.5 lakh crore, to ensure protection and sustained development,” said J James, president of Tamil Nadu Association of Cottage and Micro Enterprises (TACT).
He also flayed the Union government for not restoring the 15 per cent subsidy and reducing the GST to five per cent on products such as wet grinders, compressors, pump sets and motors.
“The calls for the formation of a price fixation committee to regulate the volatile raw material cost have also been ignored. The industry’s plea to extend the time frame for banks to initiate legal action on loan repayments to 180 days has not been mentioned. Overall, the budget offers more disappointment than relief for MSMEs at a time when the sector grapples with rising costs, credit stress and market uncertainty,” James said.
Industry representatives also expressed disappointment over the absence of key announcements to address persistent challenges faced by the MSME sector. They rued the lack of relief on bank interest rates and the absence of exclusive policy initiatives to accelerate MSME growth, despite the sector’s significant contribution to both gross domestic product and employment generation.
“Our long-standing demands, such as enhanced access to MUDRA loans and the establishment of dedicated bank branches for micro and small enterprises, found no mention in the budget. Also, a promise made in last year’s budget to issue credit cards to entrepreneurs for purchasing raw materials remains unimplemented,” said C Siva Kumar, president of Coimbatore Tirupur district Micro and Cottage Entrepreneur Association (COTMA).
Other industrial bodies like the Confederation of Indian Industry (CII), Coimbatore and Coimbatore District Small Industries Association (CODISSIA), meanwhile, hailed the budget as comprehensive and growth-oriented.