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In the Union Budget for 2026–27, the Federation of Associations of Cottage and Small Industries (FACSI) has urged the government to strengthen support for small businesses by offering tax incentives, improving credit availability, and simplifying regulatory processes. According to the federation, such initiatives would accelerate the growth of micro and small enterprises and enhance their contribution to the national economy.
FACSI President H. K. Guha, in a pre-budget communication addressed to Finance Minister Nirmala Sitharaman, stated that these recommendations were formulated after extensive discussions with entrepreneur associations and MSE groups from various regions of the country.
Among its key proposals, FACSI called for the formation of a dedicated council for micro and small enterprises under the Ministry of MSME. The federation also recommended increasing the GST exemption limit and introducing a single, simplified GST return system tailored for small business units.
To address credit-related challenges, FACSI suggested making collateral-free loans of up to ₹1 crore mandatory for MSEs, with interest rates capped between 6 and 7 percent. It also proposed interest subsidies during periods of financial hardship and automatic renewal of working capital limits for enterprises that meet banking compliance standards.
Highlighting liquidity constraints faced by small units, the federation demanded that GST refunds be processed within 15 days, with mandatory interest payable by the government in case of delays. Additionally, it recommended the removal of criminal penalties for minor procedural non-compliances related to GST filings, labour regulations, and local laws.
For export-focused enterprises, FACSI recommended setting up an Export Risk Equalisation Fund to protect small exporters from losses caused by sudden increases in tariffs. It also sought higher lending targets for MSEs by SIDBI and public sector banks.
The federation further requested a reduction in tender-related fees for MSEs participating through the Government e-Marketplace (GeM) portal and stronger functioning of State Facilitation Councils to ensure faster resolution of delayed payment cases. FACSI noted that several of these measures would require amendments to the MSMED Act, 2006.
In addition, FACSI emphasized the need for collaboration with State governments to extend subsidies for renewable energy installations, lower electricity costs and local taxes, and provide enhanced infrastructure and facilities for enterprises operating in industrial estates managed by State development agencies.
Guha concluded that the implementation of these measures would significantly support the expansion and sustainability of micro and small enterprises across India.