New Delhi, Jan 7 (.) The PHD Chamber of Commerce and Industry (PHDCCI) has outlined a comprehensive set of proposals for the union Budget 2026-27 on Wednesday here, calling for focused policy support to strengthen India’s Micro, Small and Medium Enterprises (MSME) sector.
Dr Ranjeet Mehta, CEO and Secretary General of PHDCCI, said MSMEs hold the potential to propel India towards a 10 per cent growth trajectory, noting that the sector’s role in manufacturing, exports and employment has expanded steadily over the years.
In 2025, MSMEs accounted for around 30 per cent of India’s manufacturing output and emerged as the second-largest employer after agriculture, underlining their growing economic significance.
India’s export performance also reflects the rising contribution of MSMEs, with total exports forming 43.59 per cent of GDP in 2022-23, increasing to 45.73 per cent in 2023-24 and further to 45.79 per cent in 2024-25 up to June 2025.
According to PHDCCI, these trends indicate deeper integration of Indian enterprises into global trade networks and value chains.
The chamber highlighted the formalisation of the sector as another positive development, with more than 7.30 crore enterprises registered on the Udyam Registration Portal and the Udyam Assist Platform between July 2020 and December 2025.
This expanding registration base, it said, creates scope for more targeted and structured policy interventions for MSMEs.
However, PHDCCI stressed that sustaining India’s ambition of becoming a major manufacturing and export hub will require addressing persistent challenges faced by MSMEs, particularly in access to finance, regulatory compliance and technology adoption.
Against this backdrop, the chamber has put forward a series of Budget proposals aimed at easing financial constraints, reducing costs and improving competitiveness.
One of the key recommendations is the reintroduction of an interest subvention scheme for MSME credit. PHDCCI proposed a two per cent interest subsidy on new and incremental loans from banks and non-banking financial companies, arguing that high borrowing costs continue to weigh on MSMEs.
Lower interest rates, it said, would support better repayment behaviour and help enterprises cope with global economic and geopolitical uncertainties.
The chamber has also sought an upward revision of loan limits under the Pradhan Mantri MUDRA Yojana, citing a sharp rise in project costs since the scheme’s launch in 2015.
It recommended increasing the Shishu loan limit to Rs 1 lakh, the Kishore category to Rs10 lakh, and raising the ceiling for Tarun and Tarun Plus loans to Rs 20 lakh, in order to better align credit availability with present-day business needs.
To support exporters, PHDCCI has called for the reintroduction of the Interest Equalization Scheme on pre- and post-shipment export credit.
The proposal includes extending the benefit to service exporters in addition to manufacturing exporters, with the objective of improving price competitiveness of Indian MSMEs amid rising global tariff pressures.
Recognising the need for alternative financing avenues, the chamber has proposed equity infusion through the Fund of Funds, particularly for start-ups.
It said equity support could address seed capital requirements and enable faster growth by reducing dependence on high-cost debt.
PHDCCI has also recommended expanding the scope of MSME Facilitation Councils under the MSME Development Act, 2006.
Currently available only to small enterprises, the chamber suggested that medium enterprises should also be allowed to approach these councils for redressal of delayed payment issues.
On the technology front, the chamber proposed enhancing the Credit Linked Capital Subsidy Scheme for Technology Upgradation. It recommended increasing the investment ceiling to Rs 2 crore from the current ₹1 crore to reflect rising costs of modern, green and eco-friendly technologies.
In a move aimed at easing compliance burdens, PHDCCI has suggested amendments to Section 44AB of the Income Tax Act to exempt all micro enterprises with turnover up to ₹10 crore from mandatory tax audits, irrespective of profit margins.
The chamber said this could significantly reduce compliance costs, which currently range between Rs 75,000 and Rs 1.5 lakh annually for small businesses.
Taken together, PHDCCI said its union Budget 2026-27 proposals offer a comprehensive policy framework focused on improving access to finance, lowering regulatory hurdles and strengthening institutional support.
The chamber emphasised that such measures are critical to unlocking the full growth potential of MSMEs and reinforcing their role as a cornerstone of India’s economic expansion.
. SAS PRS