FACSI Seeks Tax, Credit and Regulatory Relief for Micro and Small Enterprises in Union Budget 2026–27

Industry Body Submits Pre-Budget Proposals to Finance Minister​

The Federation of Associations of Cottage and Small Industries has urged the central government to introduce targeted tax, credit and regulatory relief measures for micro and small enterprises in the Union Budget for 2026–27, stressing the need to sustain growth and reinforce the sector’s role in the industrial ecosystem.

In a pre-budget letter submitted to Finance Minister Nirmala Sitharaman, FACSI president H K Guha said the proposals were formulated after consultations with multiple associations of entrepreneurs and micro and small enterprise groups across the country.

GST Simplification and Dedicated MSME Council Proposed​

Among its key demands, FACSI has called for the constitution of an exclusive council for small and micro enterprises under the Ministry of MSME. The federation also sought a higher exemption threshold under the Goods and Services Tax framework and the introduction of a single, simplified GST return for small units.

To address compliance-related stress, the industry body recommended complete decriminalisation of procedural lapses linked to GST returns, labour regulations and local laws.

Push for Easier Credit and Faster GST Refunds​

Highlighting liquidity constraints faced by micro and small enterprises, FACSI proposed statutory collateral-free lending of up to Rs 1 crore for MSEs, with an interest rate cap of 6 to 7 per cent. It also sought interest subvention during periods of financial stress and automatic renewal of working capital limits for units that comply with banking norms.

The federation further demanded GST refunds within 15 days, along with statutory interest in cases of delays by the government.

Export Risk Fund and Support Through GeM Portal​

For export-oriented units, FACSI recommended the creation of an Export Risk Equalisation Fund to compensate small exporters impacted by sudden tariff hikes. It also proposed an enhancement of lending targets for MSEs by SIDBI and public sector banks.

The letter also called for a reduction in fees for micro and small enterprises participating in tenders on the GeM portal and for stronger functioning of State Facilitation Councils to expedite cases related to delayed payments. FACSI noted that certain reforms would require amendments to the MSMED Act, 2006.

Coordination With States and Renewable Energy Support​

FACSI emphasised the importance of closer coordination with state governments to extend subsidies on renewable energy installations, electricity charges and local levies. It also sought special facilities for enterprises located in industrial estates managed by state development corporations.

“These measures will be a significant enabler for the growth of MSEs in India,” Guha said.