Budget 2026: FACSI urges tax & credit relief for MSEs; here's why

The Federation of Associations of Cottage and Small Industries (FACSI) has requested the central government to provide tax, credit and regulatory relief measures 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 said the recommendations were framed after consultations with various associations of entrepreneurs and MSE groups across the country, according to PTI.Among the key demands, the industry body called for the constitution of an exclusive council for small and micro enterprises under the Ministry of MSME, a higher exemption threshold under the GST regime and a single, simplified GST return for small units.FACSI also proposed statutory collateral-free lending of up to Rs 1 crore for MSEs at an interest cap of 6-7 per cent, interest subvention during financial stress and automatic renewal of working capital limits for compliant units.Highlighting liquidity concerns, the federation demanded GST refunds within 15 days with statutory interest for delays and complete decriminalisation of procedural lapses under GST, labour and local laws.For export-oriented units, FACSI suggested the creation of an Export Risk Equalisation Fund to support small exporters affected by sudden tariff hikes, alongside higher lending targets by SIDBI and public sector banks.The letter also sought a reduction in fees for MSEs submitting tenders through the GeM portal and stronger functioning of State Facilitation Councils to address delayed payments. FACSI observed that some measures would require amendments to the MSMED Act, 2006.Guha emphasised the need for closer coordination with state governments to extend subsidies on renewable energy installations, electricity charges and local levies and to provide special facilities for units in industrial estates managed by state development corporations.“These measures will be a significant enabler for the growth of MSEs in India,” Guha said.