Bengaluru Industry Voices Mixed Reactions to Union Budget 2026: Applauds MSME Focus, Flags Critical Gaps
Industrial bodies in Bengaluru have expressed a spectrum of reactions to the Union Budget 2026-27, unveiled by Finance Minister Nirmala Sitharaman on Sunday. While welcoming the pronounced push for Micro, Small, and Medium Enterprises (MSMEs) and the manufacturing sector, key associations have raised significant concerns over persistent challenges that continue to plague small industries, particularly in Karnataka.
Budget Announcements: A Boost for Manufacturing and IT
The budget presentation focused heavily on accelerating manufacturing and bolstering the Information Technology sector. Key announcements included a substantial Rs 40,000 crore outlay for the Electronics Components Manufacturing Scheme, the creation of 'Champion SMEs' to support micro and small enterprises, a Rs 10,000 crore SME growth fund, and a Rs 2,000 crore top-up to the Self-Reliant India Fund established in 2021, specifically for micro enterprises.
For Karnataka, with its vast industrial base and robust IT ecosystem, these measures are anticipated to provide a significant impetus. The state stands to gain in sectors like semiconductors, electronics, and aerospace components, where it already possesses a strong foundation.
Industry Concerns: Credit Access, Awareness, and Neglect of Micro-Units
Despite the positive announcements, industry representatives interviewed highlighted multiple unresolved issues. A primary concern is the continued struggle of small industries with limited access to credit and poor awareness of MSME schemes among banking institutions.
Uma Reddy, President of the Federation of Karnataka Chambers of Commerce & Industry (FKCCI), pointed out the absence of a dedicated policy for micro and small enterprises, which constitute a staggering 97% of all industrial units in Karnataka. "With impending minimum wage revisions and new labour codes, micro firms employing 40-50 people and training college dropouts urgently need incentives or operational flexibility," she stated. Reddy emphasized that these enterprises are crucial for job creation and skill development at the grassroots, yet their cost structures and efficiency challenges are often overlooked.
MG Rajagopal, Immediate Past President of the Karnataka Small Scale Industries Association (KASSIA), echoed these sentiments, noting that Karnataka's MSMEs are already grappling with technological and labour challenges. "Higher wages could further strain them. Banks frequently hesitate to extend MSME benefits unless under pressure, and small industries face difficulties in accessing even small land parcels," he explained. Rajagopal lamented that despite being major contributors to GDP, exports, and employment, MSMEs feel sidelined, with growth funds and collateral-free loans failing to reach many deserving units.
Calls for Innovation, R&D, and Enhanced Support Mechanisms
Prashant Gokhale, President of the Bangalore Chamber of Industry and Commerce (BCIC), advocated for a stronger emphasis on innovation and research & development. "This is essential for India to advance into high-tech manufacturing and establish thought leadership. From Karnataka's perspective, the budget can enhance job creation and economic resilience, particularly in our core strength areas," he remarked.
DP Danappa, President of the Peenya Industries Association, outlined several areas where support remains inadequate. "The cost of doing business remains prohibitively high for MSMEs, while export support, logistics, and incentives are insufficient. Adoption of digital and smart manufacturing is slow, and there is limited impetus for technology upgradation," he noted. Danappa highlighted the lack of strengthened procurement and marketing support for micro and small enterprises, with no clear budget announcement on market access or public procurement. He called for a dedicated interest subvention or subsidy scheme specifically tailored to ease the financial and market pressures on these vital but vulnerable business segments.
In summary, while Bengaluru's industrial community acknowledges the Union Budget 2026's strategic direction towards bolstering MSMEs and manufacturing, it underscores an urgent need for more targeted, accessible, and effective implementation of support measures to address the deep-rooted challenges faced by small and micro-enterprises across Karnataka.
