Manufacturing units seek faster payments, infra upgrades, and policy predictability to scale amid rising costs and delays.
Manufacturing MSMEs Gear Up for Budget 2026: Prioritising Predictable Cash Flows Over New Schemes
As India gears up for the Union Budget 2026 presentation on February 1 by Finance Minister Nirmala Sitharaman, manufacturing Micro, Small, and Medium Enterprises (MSMEs) are raising their voices for practical reforms. These vital cogs in the ‘Make in India’ wheel—from power transmission firms to drone makers and home appliance producers—seek faster payments, robust infrastructure, and steady policies to combat daily cash-flow hurdles. Instead of flashy incentives, they emphasise execution of existing schemes like Production Linked Incentive (PLI) to fuel sustainable scaling.
This demand resonates deeply in a nation where MSMEs contribute over 30% to GDP and employ millions, yet grapple with systemic bottlenecks. With the economy projected to grow at 7-7.5% this fiscal, Budget 2026 offers a golden window to address these pain points, ensuring small manufacturers thrive amid rising input costs and global competition.
Power Sector’s Urgent Call for Infrastructure Boost
In the power transmission and distribution arena, MSMEs highlight a glaring gap between renewable energy ambitions and grid realities. Utsav Panchal, Director and CEO of Rajesh Power Services—a key player in EPC projects—stresses the need for heftier budget allocations aligned with India’s renewable targets. States like Gujarat and Rajasthan are ramping up solar and wind capacities, but evacuating this green power demands swift investments in substations, underground cabling, and high-voltage lines.
Panchal’s firm, with its expertise in turnkey power projects, has seen underground distribution cut outages dramatically in urban clusters. Dedicated incentives for such upgrades would spike manufacturing demand for electrical gear, he notes. Beyond basics, smart grid modernisation—extending to advanced equipment—could supercharge domestic production of digital grid tech, and Budget 2026 must bridge this infra lag to power Viksit Bharat’s energy transition.
Tackling Capital Expenditure and GST Maze
On factory floors, consumer durables makers face unique pressures from capital needs and tax complexities. Kalpesh Ramoliya, Founder and Chairman of Raj Cooling Systems, urges sharper capex incentives tailored for MSMEs investing in automation, energy-efficient tools, and backward integration. Starting from a modest Rs 10,000 in 2006, his Rajkot-based firm now boasts Rs 150 crore turnover and exports to 32 nations, yet rising metal, plastic, logistics, and energy costs squeeze margins.
MSMEs demand GST rationalisation and customs relief for high input costs to reduce margins pressure and enable better pricing; they seek automation subsidies and energy credits for capex barriers to achieve faster scaling and efficiency gains; and they call for plug-and-play parks to address infra gaps and ensure smoother operations. Ramoliya also pushes for centre-state synergy on plug-and-play parks, renewable energy perks like accelerated depreciation, and fewer disputes, steps that would lower production costs and make ‘Made in India’ appliances more competitive in tier-2/3 markets and beyond.
Working Capital Woes: The Universal Bottleneck
Across sectors, delayed payments emerge as the biggest drag, locking over Rs 7.3 lakh crore in MSME receivables and crippling growth. Ramoliya advocates low-interest, long-tenure loans for machinery via expanded CGTMSE guarantees and subventions. This would streamline inventory from procurement to sales, easing the full product cycle.
In capital-heavy drone manufacturing, Satyabrata Satapathy, Co-founder and CEO of BonV Aero, flags PSU and defence contract delays. His Bhubaneswar firm, known for high-altitude logistics drones inducted by the Indian Army, calls for enforceable 45-day payment mandates with digital tracking and auto-discounts. Predictable cash flows would free private capital for R&D in autonomy, batteries, and secure comms, reducing subsidy reliance.
Such reforms align with MSMED Act enforcement pushes, where portals like Samadhaan show pending claims in lakhs of crores, and integrating GSTN, e-invoicing, and TReDS could automate verification, slashing cycles and boosting confidence.
Evolving Beyond PLI: Skills and Innovation Push
PLI schemes have ignited manufacturing, with textiles applications now extended to March 2026, but MSMEs want phase two focused on deep capabilities. In drones, they seek R&D credits and testing infra for a global edge; for appliances, plant subsidies and GST cuts to boost cost competitiveness; and in power, skill programmes to drive tech adoption. Satyabrata Satapathy seeks refundable R&D credits, testing subsidies, and export certification aid for drones, while Ashutosh Gupta, Director of Sales and Marketing at Summercool Home Appliances, echoes this with calls for capex subsidies, tax breaks, and PLI extensions for modernisation.
GST-duty tweaks on imports would enhance price competitiveness, Gupta adds. Skill gaps loom large too—Panchal and Gupta demand training in automation, digital grids, and next-gen tech to match Industry 4.0, and Budget 2026 could amplify programmes linking skilling to MSME needs, fostering innovation hubs.
Structural Reforms for Smoother Operations
MSMEs yearn for basics: vendor payment guarantees within timelines, simplified compliance, and lighter paperwork. Ramoliya warns delays hobble investments, while Gupta flags labour laws and filings as growth distractions. A robust tracking system would build vendor trust, fortifying the ecosystem.
With Parliament’s Budget session from January 28 to April 2, expectations run high for MSME-centric measures, and the Economic Survey on January 31 will set the tone. Leaders concur: Fix cash flows, infra, and policies matching business rhythms, and growth will surge organically.
In this Amrit Kaal, Budget 2026 can empower these desi manufacturers to not just survive but lead global supply chains. Their unified plea underscores a truth—predictability trumps promises, paving the path for Atmanirbhar Bharat’s manufacturing might.
