Budget 2026-27 | Why it marks the end of ‘survival mode’ for Indian enterprise

For nearly a decade, India’s approach to startups and MSMEs has felt like emergency-room services. Urgent. Necessary. And almost entirely about keeping the patient alive. 

If you were a founder or a small business owner between 2016 and 2024, you didn’t just build a company, you survived a series of economic shocks. Demonetisation stopped cash flows. COVID froze demand. Supply chains snapped. Policy responses, understandably, were reactive. Credit guarantees, interest subventions, and emergency lending windows to make it to the next quarter.

 

 That phase was unavoidable

 But Budget 2026 signals something important. Quietly, without grandstanding, it suggests that the government no longer sees Indian enterprise as fragile. The message is simple: survival is no longer the goal. Growing up is. 

From ‘Helping You Borrow’ to ‘Backing You to Win’ The most meaningful shift in this budget is how capital is imagined. For years, MSMEs were treated primarily as borrowers. Policy success meant cheaper loans, easier loans, more loans. Debt piled up, margins stayed thin, and many businesses remained alive, but not healthy. 

The ₹10,000 crore SME Growth Fund changes that vocabulary. The stated aim is to build ‘Champion SMEs.’ And champions aren’t rescued they’re backed. By prioritising growth equity over more debt, the budget begins to treat MSMEs as investable enterprises, not welfare cases. The implication is clear: formalise, improve governance, show ambition and the state is willing to act less like a lender and more like a long-term partner. 

 That’s a psychological shift as much as a financial one. 

 Narrowing the valley of death 

Every entrepreneur knows the Valley of Death. That brutal phase where the business works, customers exist, but scale hasn’t kicked in yet. Cash burns fast. Confidence runs thin. Many promising firms don’t fail because the idea is weak, but because they run out of money just before things turn. 

The ₹2,000 crore top-up to the Self-Reliant India Fund is an unusually honest admission of this reality. It recognises that early-stage enterprises don’t just need loans they need risk capital precisely when things feel most uncertain. 

This is policy empathy. Government listening to start-ups and their challenges. An acknowledgement that momentum alone doesn’t pay salaries. By injecting equity at the scale-up stage, the government is trying to shrink the valley of death does not eliminate risk. Reduce the number of businesses that fall for avoidable reasons. 

When invoices finally start behaving like cash and assets 

 If capital is the engine, cash flow is oxygen. And delayed payments have quietly suffocated Indian MSMEs for decades. 

 Budget 2026 takes a hard stance by mandating TReDS for all MSME procurement by central public sector enterprises. That alone is significant. But the real innovation lies in allowing receivables to be treated as asset-backed securities. 

An invoice stops being a piece of paper you anxiously follow up on and becomes something you can monetise. Liquidity replaces uncertainty. Borrowing costs drop. And, above all, the power imbalance between small suppliers and large buyers begins to correct itself. This can create a level field and transform MSMES and start-ups. 

 Innovation works better when it lives nearby 

 India has talked about industry–academia collaboration for decades. Most of it has amounted to polite MoUs, ceremonial handshakes and photo ops. Budget 2026 tries a different approach: proximity. 

The plan to develop university townships near industrial and logistics corridors is about reducing friction. When labs, factories, students, and startups share geography, innovation stops being theoretical. 

Research finds its way to production lines. Talent doesn’t have to migrate blindly. AI stops being a buzzword and becomes a tool students actually use on real data. The proposed Education–Employment–Enterprise Standing Committee on AI is another signal of urgency. We can’t afford graduates who need six months of retraining. AI literacy has to start before the first job offer. 

 Compliance as a human problem, not a tech problem 

 For founders outside metros, ‘Ease of Doing Business’ often feels abstract. Another portal rarely helps when a filing is rejected, and no one explains why. The Corporate Mitra initiative gets this right. It treats compliance as a service problem, not a software one. Trained professionals in smaller cities who can guide founders through regulatory messiness are far more valuable than another dashboard. This matters especially for entrepreneurs in Tier-II and Tier-III cities—the ones building quietly, without venture capital safety nets. 

 Small shipments, global ambitions 

 Exports have long favoured scale. If you sold niche products like organic teas, artisanal goods, specialised components, the system treated you like a shipping giant. Paperwork and costs made global D2C ambitions unrealistic. 

Removing the ₹10 lakh cap on courier exports is a big deal. It lets high-value, low-volume businesses go global using everyday logistics networks. 

Even better is the attention to returns. Anyone who has sold internationally knows how a single rejected shipment can erase profits. By smoothing re-import processes through tech-enabled systems, the budget finally reflects how small exporters actually experience global trade. 

 Does Budget 2026 solve everything? No. There’s a real risk that better-prepared firms benefit more, while informal enterprises struggle to keep up. Execution will matter as it always does in India. 

 But the deeper achievement isn’t the schemes. It’s the attitude. This is a budget that treats entrepreneurs with respect, not sympathy. It doesn’t glorify struggle—it builds systems to reduce it. It assumes Indian enterprise can compete, scale, and lead. 

A decade ago, we were trying to keep the patient alive. Now, we’re training for marathon. That’s what growing up looks like. 

 

—The author, Rahul Nainwal is Head, UPES School of Business, CEO of UPES Runway Incubator, and an entrepreneur. The views are personal.