Industry bodies World Trade Centre (WTC) Mumbai and the All India Association of Industries (AIAI) have urged the government to announce targeted and time-bound measures for micro and small enterprises in the Union Budget 2026-27, warning that persistent credit stress and export constraints could erode jobs and manufacturing capacity.
In a policy memorandum submitted to the Union Finance Ministry, the two organisations said MSMEs are bearing a disproportionate burden of high borrowing costs, delayed receivables and rising compliance expenses, challenges that have been intensified by repeated global economic disruptions.
MSMEs Face Structural Disadvantages
According to the industry bodies, MSMEs contribute around 45% of India's exports and nearly 30% of gross value added, yet continue to face structural disadvantages in access to finance and global markets. The memorandum cautioned that without timely intervention, these constraints could weaken India's broader manufacturing and trade ecosystem. The Chairman of World Trade Centre Mumbai and President of AIAI said access to affordable finance remains the single biggest challenge for micro and small enterprises.
GST-Linked Credit Framework Proposed
To address the credit crunch, the industry bodies proposed the creation of a national, real-time credit evaluation framework that links invoices and payments through the Goods and Services Tax Network (GSTN). Such a system, they said, would allow trade credit to be recognised as a formal financing instrument.
Under the proposed model, lenders could assess MSMEs based on verified cash flows and payment behaviour, rather than relying solely on historical balance sheets. The Chairman noted that the reform would not require additional budgetary expenditure, yet could significantly improve credit access for small businesses.
Export Challenges and Market Diversification
The memorandum also highlighted the impact of recent geo-economic shocks on export-oriented MSMEs and called for stronger policy support to help businesses diversify into new markets. The industry bodies urged the government to accelerate trade agreements and promote borderless commerce, enabling MSMEs to integrate more deeply into global value chains.
Push for Pre-Shipment Finance and E-Commerce Support
In addition, WTC Mumbai and AIAI recommended a clear policy framework for pre-shipment financing, covering the entire journey from production to port. They also sought budgeted assistance for MSME onboarding on e-commerce platforms, logistics integration and export documentation.
Such measures, the memorandum said, would allow smaller firms to participate more effectively in both domestic and global value chains, improving competitiveness and resilience.
Policy Inputs Ahead of Budget 2026-27
The recommendations form part of WTC Mumbai and AIAI's broader engagement with policymakers aimed at conveying on-ground economic realities and strengthening India's trade, investment and manufacturing ecosystem ahead of the Union Budget 2026-27.
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