FACSI urges centre for GST, credit relief to boost MSEs in 2026-27 budget

The Federation of Associations of Cottage and Small Industries (FACSI) has urged the Union Government to provide targeted tax, credit, and regulatory support for micro and small enterprises (MSEs) in the 2026-27 Union Budget , aiming to sustain growth and strengthen their role in India’s industrial ecosystem.

In a pre-budget letter to Finance Minister Nirmala Sitharaman , FACSI president H K Guha highlighted key proposals after consulting entrepreneurs and MSE associations across the country. Among the GST-related demands , the industry body called for a higher exemption threshold , a single simplified GST return for small units, faster refunds within 15 days with statutory interest for delays, and decriminalisation of procedural lapses .

On the credit front , FACSI proposed collateral-free loans up to Rs 1 crore at 6–7% interest, automatic renewal of working capital limits for compliant units, and interest subvention during financial stress. For export-oriented MSEs , the federation suggested the creation of an Export Risk Equalisation Fund to shield small exporters from sudden tariff hikes and requested higher lending targets through SIDBI and public sector banks .

Additional measures included reduced fees for tenders via the GeM portal , better functioning of State Facilitation Councils to resolve delayed payments , and coordinated support from states for renewable energy subsidies, electricity charges, and industrial estate facilities . Some proposals may require amendments to the MSMED Act, 2006 .

Potential impact on the economy:

Experts say these measures could significantly boost the growth and competitiveness of micro and small enterprises (MSEs), which employ millions across India. MSEs are a key part of the broader MSME sector, which contributes around 30 per cent to India’s GDP and accounts for roughly 45 per cent of the country’s exports underscoring their role in both domestic economic activity and global trade. They are also major employment generators, providing work to about 60–62 per cent of the workforce , particularly in rural and semi‑urban areas. Simplified GST compliance and faster refunds would improve liquidity, enabling small businesses to invest and expand. Collateral‑free loans and credit support would increase working capital availability, reducing defaults and fostering entrepreneurship. Export risk mitigation could further enhance India’s global trade footprint by helping small exporters weather international market shocks, strengthening their contribution to national growth.

FACSI believes that these interventions could not only strengthen the industrial ecosystem but also drive job creation and economic growth in the coming fiscal year, contributing to the vision of a Viksit Bharat.