Union Budget 2026: FM Announces ₹10,000 Crore SME Growth Fund and TREDS reforms

Finance Minister Nirmala Sitharaman on February 1 announced a series of steps for micro, small and medium enterprises (MSMEs) while presenting the Union Budget 2026. The measures focus on equity funding, faster payments, credit access and administrative support for smaller firms. 

MSMEs account for a large share of employment and exports, but many continue to face delayed payments and limited access to long-term capital. The Budget proposals aim to address these issues through changes to funding structures and payment systems. 

₹10,000 Crore SME Growth Fund 

The Budget proposed a new ₹10,000 crore SME Growth Fund. The fund will provide equity support to select enterprises based on pre-defined criteria. It is intended for firms that have shown the ability to grow and require capital to expand operations. 

Alongside this, the Self-Reliant India Fund will receive additional support. The Budget speech mentioned a ₹2,000-crore top-up, while the overall allocation for the fund-of-funds structure is expected to increase further during the year to continue equity participation in MSMEs. 

TReDS to be Central to MSME payments 

To address liquidity concerns, the Budget placed emphasis on the Trade Receivables Discounting System (TReDS). Over ₹7 lakh crore worth of MSME invoices have already been financed through the platform. 

The government plans to make TReDS mandatory for all central public sector enterprises when dealing with MSMEs. Other proposals include linking the Government e-Marketplace with TReDS, extending credit guarantee cover for invoice discounting, and allowing TReDS receivables to be issued as asset-backed securities. 

Industrial Clusters and Sector Initiatives 

The Budget also announced plans to revive 200 traditional industrial clusters through infrastructure upgrades and technology support. A separate scheme for container manufacturing was proposed to support domestic production. 

Sector-specific measures were outlined for textiles, sports goods and rural industries. These include mega textile parks, an integrated textile programme and support for khadi and handloom activities under the Mahatma Gandhi Gram Swaraj initiative. 

Compliance Support at Local Level 

To help MSMEs manage regulatory and compliance requirements, the government will create a cadre of “Corporate Mitras” in tier-II and tier-III towns. These professionals will be trained by institutes such as ICAI, ICSI and ICMAI. 

Read More: Union Budget 2026: FM Announces a Record ₹12.2 Lakh Crore for Capex in FY27! 

Conclusion 

The Budget 2026 announcements outline changes aimed at improving equity access, payment timelines and administrative support for MSMEs through institutional and system-level measures. 

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