Budget 2026 Expectations Updates: As India prepares for Union Budget 2026, MSME leaders are calling for a strong shift from intent to impact, with a sharp focus on strengthening the cash flows of micro and small enterprises that form the backbone of India’s economy.
Sundeep Mohindru, Founder & Promoter of M1xchange, believes that the Budget must prioritise working capital access, payment discipline and cash-flow-based lending to unlock the true growth potential of MSMEs.
Why Cash Flow Is the Biggest Challenge for MSMEs
Over 90% of India’s MSME base consists of micro and small enterprises, yet most struggle with:
- Delayed payments
- Limited access to formal credit
- High borrowing costs
- Balance-sheet constraints
Weak cash flows restrict growth, innovation and job creation.
Move from Registrations to Real Impact
While digital platforms have improved MSME registration, Mohindru stresses that Budget 2026 should focus on active transacting and measurable outcomes, not just onboarding.
Budget Expectations
- Prioritise higher invoice volumes on TReDS platforms
- Track payment cycle improvements, not just registrations
- Encourage real working capital flow into MSMEs
This ensures that MSMEs see real benefits, not just policy intent.
Stronger PSU Participation to Improve Payment Discipline
Greater participation by Public Sector Undertakings (PSUs) is critical.
Key Ask
- Mandate phased or targeted PSU transacting on TReDS platforms
- Improve payment discipline across supply chains
- Give lenders higher confidence through confirmed receivables
This will unlock low-cost working capital for MSMEs.
Expand Credit Guarantee for Invoice-Based Financing
Budget 2026 Expectations
- Expand credit-guarantee coverage for invoice discounting
- Reduce lender risk
- Lower borrowing costs for small businesses
This will make invoice-based financing affordable and accessible.
Shift Towards Cash-Flow-Based Lending
To widen formal credit access, Mohindru recommends:
- Use GST filings, e-invoices and utility payments as data signals
- Move beyond balance-sheet-only lending
- Enable cash-flow-based credit assessment
This will bring thousands of credit-constrained MSMEs into the formal system.
Deep-Tier Financing to Unlock Supply Chain Growth
Why It Matters
Most financing stops at first-level suppliers.
Budget Ask
- Support deep-tier financing platforms
- Extend liquidity beyond Tier-1 suppliers
- Enable small MSMEs to integrate into large value chains
This will boost productivity, scale and sustainable growth.
Why This Matters for India
If Budget 2026 adopts these reforms, India will see:
✔ Stronger MSME cash flows✔ Lower borrowing costs
✔ Faster business growth
✔ More jobs
✔ Healthier supply chains
Final Thoughts
Union Budget 2026 has the opportunity to transform India’s MSME ecosystem by strengthening cash flows, improving payment discipline and enabling cash-flow-based lending.
By empowering micro and small enterprises, India can unlock its next phase of inclusive and resilient economic growth.
Disclaimer: This article is for educational and informational purposes only.
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