MSMEs and Startups Present Wishlist for Compliance Reforms
As the Union Budget 2026 approaches, industry leaders are voicing their expectations for measures aimed at alleviating the financial pressures on micro, small, and medium enterprises (MSMEs) while bolstering the startup ecosystem. With a focus on job creation and entrepreneurship, stakeholders are advocating for targeted initiatives to address cash-flow challenges, compliance issues, and long-term sustainability. The call for action comes amid ongoing funding constraints and regulatory hurdles that threaten the growth of these vital sectors.
MSMEs: Focus on Liquidity, Costs, and Exports
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has emphasized the importance of MSMEs in driving employment and exports. The organization is urging the government to enforce strict payment timelines and expedite Goods and Services Tax (GST) and Remission of Duties and Taxes on Exported Products (RoDTEP) refunds to alleviate working capital stress. ASSOCHAM also highlighted the need for time-sensitive support for sectors adversely affected by tariff fluctuations, particularly textiles, gems and jewelry, and seafood.
To further support MSMEs, ASSOCHAM is advocating for expanded incentives to promote the adoption of distributed renewable energy solutions. The organization is also pushing for enhanced cash-flow-based lending through digital platforms and Account Aggregators, as well as targeted credit enhancements for Non-Banking Financial Companies (NBFCs) that lend to MSMEs. These measures aim to lower borrowing costs and simplify customs procedures, thereby improving logistics and facilitating cross-border e-commerce exports.
Startups: Governance Reforms and Easier Compliance
The Confederation of Indian Industry (CII) has raised concerns regarding recent corporate governance challenges faced by Indian startups, underscoring the need for stronger oversight mechanisms. The CII recommends fostering independent oversight, enhancing shareholder protection, and promoting transparency to ensure ethical management practices that prioritize long-term success.
To further strengthen the startup ecosystem, the CII suggests allowing startups to maintain accounts in non-INR currencies, which would facilitate global expansion. Additionally, the organization calls for a reduction in compliance burdens by simplifying the approval process for licenses and permits, as well as easing adherence to labor and taxation laws. These reforms aim to create a more conducive environment for startups to thrive.
Broader Policy Context Ahead of Budget Day
The expectations set forth by industry bodies reflect the concerns of founders across various sectors. Despite numerous government initiatives, startups continue to grapple with limited access to credit, stringent compliance requirements, and taxation challenges. Ashok Chandra, Managing Director and CEO of Punjab National Bank, noted that MSMEs are likely to remain a focal point in the upcoming Union Budget, alongside rural infrastructure and capital expenditure-led growth. He emphasized that prioritizing these areas could attract new entrepreneurs and capital investment.
As Budget Day approaches, industry leaders and entrepreneurs remain optimistic that targeted interventions for MSMEs and startups will help stabilize cash flows, reduce regulatory friction, and foster sustainable growth. The anticipation for effective policy measures underscores the critical role these sectors play in the overall economic landscape.
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