Capex, credit and clusters: Industry hails Budget’s roadmap for manufacturing and MSMEs

India Inc and export bodies have broadly welcomed the Union Budget 2026–27, calling it a growth-oriented and reform-driven blueprint that strengthens manufacturing, improves trade facilitation and deepens support for micro, small and medium enterprises (MSMEs).

The Federation of Indian Export Organisations (FIEO) said the Budget sends a strong signal on India’s intent to enhance global competitiveness and integrate more deeply with global value chains. S C Ralhan, President, FIEO, said the Union Budget 2026–27 clearly demonstrates the government’s resolve to translate India’s economic potential into tangible performance. The strong thrust on manufacturing, MSMEs, infrastructure and services—backed by meaningful tax and customs reforms—will enable Indian exporters to integrate more competitively with global value chains,” he said.

FIEO also welcomed the government’s focus on strengthening domestic manufacturing across high-value and strategic sectors such as electronics, semiconductors, biopharma, textiles, chemicals, aircraft components, construction equipment and rare earth magnets. The proposed revival of 200 legacy industrial clusters, along with sector-specific initiatives, is expected to improve scale, productivity, technology adoption and export readiness.


On trade facilitation, Ralhan said duty exemptions on key inputs, extension of export timelines, recognition of trusted exporters and factory-level clearance of export cargo would significantly reduce transaction costs and enhance supply-chain efficiency. “These reforms will directly strengthen exporter confidence and competitiveness,” he added.

Exporters of engineering goods echoed similar optimism. Pankaj Chadha, Chairman of EEPC India, said the Budget had reinforced the government’s thrust on infrastructure development, reforms and local manufacturing, with additional measures to boost MSMEs. “The record Rs 12.2 lakh crore capital expenditure proposed for FY27 is set to further upgrade infrastructure and help lower logistics and transportation costs,” Chadha said, adding that the proposed single, digital customs clearance window would significantly reduce procedural burdens for industry. He also welcomed the proposal allowing manufacturing units in special economic zones to sell goods in the domestic tariff area at concessional duty as a one-time relief.

Chadha described the mandatory use of the Trade Receivables Discounting System (TReDS) for all CPSE purchases as a “very significant” step. “Linking GeM with TReDS will help MSMEs realise payments faster while accessing competitive financing rates,” he said. He also highlighted initiatives such as the Rs 10,000 crore SME Growth Fund, the scheme for container manufacturing and the setting up of dedicated rare earth corridors as key positives.

From a development and employment perspective, Lakshmi Venkataraman Venkatesan, Founding and Managing Trustee of Bharatiya Yuva Shakti Trust, welcomed the enhanced credit focus for MSMEs but flagged the sector’s persistent financing gap. “Credit schemes for MSMEs are a welcome move and the Rs 10,000 crore growth fund, along with a Rs 2,000 crore top-up to the Self-Reliant India Fund, will provide much-needed impetus. However, the addressable credit gap of nearly Rs 30 lakh crore, as highlighted by SIDBI, remains a concern,” she said, noting that the average loan size must rise meaningfully to enable scale.

She said special emphasis on mass employment-generating sectors such as handloom, handicrafts, tourism and textiles would support inclusive growth. Venkatesan also described the Budget’s focus on skill development, modular short-term courses, AI-driven skilling initiatives and youth-centric employment programmes as a defining feature. “This is rightly a ‘yuva shakti-driven Budget’. Skills will continue to remain a central pillar of India’s growth,” she said.

From labour-intensive sectors, Puran Dawar, Chairman of the Development Council for Footwear and Leather Industry, said the Budget’s emphasis on infrastructure, exports and employment creation would directly benefit MSME-driven industries such as leather and footwear. He welcomed the expansion of the IGCR scheme to allow duty-free import of shoe uppers for exports, calling it a long-pending demand that would enhance India’s global competitiveness. “Overall, Budget 2026–27 avoids short-term populism and focuses squarely on long-term economic strengthening through investment, exports and employment generation,” Dawar said.

Professional services firms noted that the manufacturing push would also complement India’s expanding trade architecture. Anil Talreja, Partner at Deloitte India, said the multi-sector manufacturing push—from semiconductors and biopharma to rare earths and high-precision components—would help India prepare for the operationalisation of key free trade agreements expected in the coming months.

Fintech players highlighted the Budget’s role in deepening formal credit access. Kushal Rastogi, Founder and CEO of Knight FinTech, said the fiscal agenda effectively bridged macroeconomic stability with inclusive financial infrastructure. “The SME Growth Fund, mandatory TReDS adoption by CPSEs and enhanced liquidity measures plug critical credit gaps, especially for enterprises in Tier-II and Tier-III towns,” he said.

Tax and regulatory experts also pointed to rising foreign investor interest in MSMEs. Manoj Purohit, Partner, Financial Services Tax at BDO India, said the Rs 10,000 crore allocation to the SME Growth Fund could make MSMEs a more attractive investment avenue, including through IPOs and alternative investment funds, while strengthening India’s self-reliance agenda.