MSMEs Ask for Easier Finance, Tech Upgrade Amid Persistent Funding Gap in Pre-Budget Talks

Stakeholders of the micro, small and medium enterprises (MSME) sector raised issues such as easier access to finance, delayed payments and the need for better technology adoption before finance minister Nirmala Sitharaman at a pre-Budget meeting on November 12. Participants also emphasised measures to reduce compliance burdens and improve ease of doing business for small enterprises, reported Mint.

Finance minister Nirmala Sitharaman chaired the third pre-Budget consultation meeting, which was part of the ongoing exercise by the finance ministry to gather inputs for the upcoming Union budget 2026-27, which is scheduled to be presented in Parliament on 1 February.

Representatives from leading MSME associations and industry bodies shared their suggestions on policy measures needed to enhance growth and competitiveness across the sector. The meeting was also attended by minister of state for finance Pankaj Chaudhary, the secretary of the Department of Economic Affairs, and senior officials from both the ministry of finance and the ministry of MSME, the finance ministry said in a statement.

“Also, the industry has sought measures that improve market access to products so that the SME sector scales up exports. We are hoping for long-term measures from the government to strengthen this key segment of the economy,” said Vinod Kumar, president, India SME Forum.

MSMEs Lack Adequate Credit

According to a report published by Small Industries Development Bank of India in May 2025 titled Understanding the Indian MSME Sector: Progress and Challenges, lack of access to “timely and adequate” credit and shortage of manpower are among the major obstacles that MSMEs face.

The report, which is based on a survey of 2,000 MSMEs in 19 sectors, stated that despite comprehensive policy initiatives, MSMEs lack access to adequate credit when they need it. While borrowings from informal sources are minimal for small and medium enterprises at 3% and 2% respectively, it is still relatively significant at 12% for micro enterprises.

Citing a press release, The Hindu reported that the study broadly estimates “the sector still has an addressable credit gap of about 24% or ₹30 lakh crore.” The gap is higher in the services sector at 27% and is estimated to be higher at 35% for women-owned MSMEs too, indicating a need for targeted policy actions, the release added.