India’s Manufacturing Bet: Can Budget 2025-26 Drive the $1 Trillion Export Dream?

Union Budget 2025-26 sets ambitious plans for MSMEs & manufacturing, but will execution match expectations? Explore key takeaways on trade finance, Bharat Trade Net, and growth challenges. Read more!

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India’s Manufacturing Bet: Can Budget 2025-26 Drive the $1 Trillion Export Dream?

The Union Budget 2025-26 was an opportunity to go beyond populist measures and set a clear economic trajectory for India’s long-term growth. While the government has laid out ambitious plans, the real question remains: Will these measures translate into tangible benefits for businesses, particularly MSMEs and manufacturers?

In a rapidly evolving global landscape, India’s MSME sector—contributing nearly 30% to GDP and 45% to exports—needs more than just incremental support. This budget brings in several noteworthy interventions, but execution will be key to ensuring that financial accessibility, ease of business, and global trade integration are realized at scale.

MSMEs: More Than Just Credit—They Need a Growth Ecosystem

Governments have long acknowledged MSMEs as the backbone of the economy, yet financing remains a fundamental hurdle. The expansion of the Credit Guarantee Scheme is a welcome step, but businesses today need more than just access to capital—they need efficient capital. High borrowing costs, limited trade finance avenues, and long payment cycles make working capital constraints a persistent challenge.

Read More: What Experts Think About Union Budget 2025-26? Check Out Here!

What’s missing is a framework that ensures capital is not just available but is also optimized. The ability to access just-in-time financing or invoice-backed lending models could revolutionize MSME liquidity. Technology-driven financial platforms, such as supply chain finance and embedded lending, can bridge these gaps far more effectively than traditional bank-led models.

Additionally, the Export Promotion Mission is a step in the right direction, but a key bottleneck remains—many MSMEs struggle with non-tariff barriers, documentation overload, and logistics inefficiencies. Reducing these friction points would accelerate export-led MSME growth far more than subsidy-driven incentives.

Bharat Trade Net: A Structural Leap for Trade Finance?

A highlight of this budget is the introduction of Bharat Trade Net (BTN)—a unified trade financing digital infrastructure. If executed well, BTN could be the most transformative initiative in India’s trade finance ecosystem, integrating exporters, banks, and government bodies into a seamless, tech-enabled platform.

However, for BTN to work, it must address some fundamental challenges:

  • Integration with global trade networks and credit bureaus to improve risk assessment.

  • A more robust legal framework to prevent delayed payments and ensure dispute resolution.

  • Simplified, automated trade documentation for MSME exporters.

If designed thoughtfully, BTN can be a game-changer in positioning India as a trustworthy and efficient export hub.

Manufacturing Push: Ambition Without Execution Will Falter

Manufacturing is the heart of any self-reliant economy, and this budget attempts to reinforce Make in India through focused incentives on electronics, clean energy, and labor-intensive sectors. However, India has witnessed past manufacturing policies that failed to deliver due to infrastructural delays, inconsistent policy execution, and supply chain inefficiencies.

To truly unlock the next wave of manufacturing-led growth, we must look beyond capital subsidies. The budget should have pushed for:

  • Faster land acquisition and plug-and-play industrial zones to cut gestation time for new manufacturing units.

  • A restructured labor law framework to encourage both formal employment and flexibility in hiring practices.

  • Targeted supply chain resilience programs, especially for MSMEs dependent on imported raw materials.

While the Production Linked Incentive (PLI) scheme expansion is a positive move, its real impact will depend on how efficiently it aligns with domestic supply chains and infrastructure enhancements.

Read More: Union Budget 2025: Income Tax Slabs and Key Announcements & Highlights

Renewable Energy and Infrastructure: The Growth Accelerators

India’s commitment to achieving net-zero emissions by 2070 requires significant structural investments in clean energy. The Nuclear Energy Mission and incentives for Green Hydrogen production are commendable, but without large-scale manufacturing capacity for EV batteries, electrolyzers, and solar modules, India will continue to depend on imports for clean tech.

The ₹25,000 crore Maritime Development Fund and expansion of UDAN 2.0 are welcome measures for trade and connectivity. However, a significant pain point remains: logistics efficiency. India’s logistics costs stand at around 13-14% of GDP, far higher than global benchmarks of 8-9%. Unless this is brought down through multimodal transport networks, export competitiveness will remain constrained.

Final Thoughts: Execution Over Announcements

The Union Budget 2025-26 has laid a strong foundation, but execution will determine whether these measures truly benefit the MSME and manufacturing sectors. India is at an inflection point, and the policies outlined in this budget must translate into tangible economic acceleration.

Read More: A Big Tax Boost for Startups and Foreign Investments in Budget 2025

By addressing trade finance friction, cutting logistics costs, and ensuring seamless working capital flows, India can truly become the global economic powerhouse it envisions. The private sector, fintech players, and government must work together to transform intent into impact.

The future of India’s MSMEs and manufacturers will not be determined by budget announcements but by how effectively we execute and integrate these reforms into the real economy. Companies that focus on solving working capital challenges, will play a crucial role in ensuring businesses have the liquidity they need to scale efficiently in this evolving landscape.

Note: The article is authored by Nirav Choksi, CEO & Co-Founder, CredAble.

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