India’s micro, small and medium enterprises (MSMEs) are entering 2026 with cautious optimism, but industry leaders say sustained growth will depend on timely payments and policies that reflect real business conditions.
After years of dealing with rising costs, delayed receivables, and regulatory complexity, business sentiment has shown signs of improvement. According to NeoGrowth’s MSME Business Confidence Study, nearly 80% of MSMEs report better recent performance, while 86% expect growth in 2026.
Despite this optimism, MSME founders across sectors such as logistics, FMCG, and product-led technology warn that confidence alone will not be enough. As the Union Budget 2026 approaches, they are calling for better policy execution rather than new headline-driven schemes.
One of the key concerns highlighted by entrepreneurs is the gap between government policy timelines and real-world business cycles.
Chereku Srikant, Founder of Digital CFO, explains that for product-based businesses, achieving genuine product–market fit is a long and capital-intensive process.
“For serious product companies, it often takes close to 10 years to reach maturity,” he says, pointing to the time required for design iterations, certifications, tooling investments, field validation, and customer adoption.
However, many government incentives and recognitions — including DPIIT-linked benefits — are time-bound and tend to expire just as companies reach the scale-up stage. According to Srikant, this creates a policy cliff where support drops off precisely when businesses need capital, talent, and global market access the most.
He has urged policymakers to consider longer, predictable incentive windows of 10–15 years for product development, research and industrialisation. He has also called for a simplified compliance regime or compliance holiday during the first three to five years, especially for procedural burdens related to TDS and labour laws.
Alongside policy issues, delayed payments remain one of the biggest day-to-day challenges faced by MSMEs. Many small businesses supplying to large corporations, public sector undertakings (PSUs), and multinational companies experience extended payment cycles and invoice holdbacks.
Srikant has emphasised the need for strict enforcement of the existing 45-day MSME payment rule, supported by automatic interest on delays, mandatory disclosure of outstanding MSME dues, and fast-track dispute resolution mechanisms.
The issue is equally serious in traditional sectors such as logistics. Mukesh Agarwal, CFO of Dhillon Freight Carrier Ltd, notes that logistics MSMEs supplying to large corporates and PSUs require time-bound payment resolution to manage working capital.
With fuel accounting for 35–45% of operating costs, Agarwal adds that even small policy interventions could make a significant difference. A reduction of ₹2–3 per litre in diesel prices, he says, would directly lower freight costs for essential goods such as food grains, FMCG products, and pharmaceuticals.
As MSMEs look ahead to Budget 2026, the message from the sector is clear: growth needs execution, cash-flow certainty, and policies aligned with business reality, not just announcements.
