Budget 2026: PHDCCI presents proposals for the MSME sector

India Budget: Industry body PHD Chamber of Commerce and Industry (PHDCCI) presented proposals for the micro, small and medium enterprises (MSME) to the Finance Minister Nirmala Sitaraman, seeking lower borrowing costs, interest equalisation scheme among a few measures to boost the sector's growth.

"The potential to further drive India's position as a manufacturing and export hub require granular targeting of key areas of challenges for MSMEs," the PHDCCI proposal statement said.

The proposals focus on reintroducing an interest subvention scheme for MSMEs with a 2 percent interest on new and incremental loans, while an upward revision of Pradhan Mantri MUDRA loan ceilings is suggested.


"The goal is to match credit availability with the current financing needs of the enterprise," Ranjeet Mehta, CEO and secretary general at PHDCCI said.

Meanwhile, the industry body recommends that initiatives like reintroducing interest equalisation scheme and expanding eligibility to service exporters could be helpful in cushioning the blow of tariff pressures on MSMEs.

For start-ups, cheaper funding options like fund of funds in the form of equity should be infused to cater to the comapnies' seed capital requirements, PHDCCI suggested.

Additionally, amendments to the Section 44AB of the Income Tax Act for exemption of all micro enterprises with turnover up to Rs. 10 crores from mandatory tax audits, irrespective of profits is proposed, aimed at cutting estimated compliance costs at Rs. 75,000 to Rs. 1.5 lakhs annually.