The industry body has proposed a series of reforms to boost India’s capital markets and strengthen access to finance for micro, small and medium enterprises (MSMEs) ahead of the Union Budget 2027-28. In its pre-Budget recommendations submitted to Finance Minister Nirmala Sitharaman, PHD Chamber of Commerce and Industry (PHDCCI) has called for the abolition of long-term capital gains (LTCG) tax on equity investments, a reduction in short-term capital gains (STCG) tax from 20% to 10%, and an extension of the NPA classification period for MSME loans from 90 to 180 days.
The chamber has also recommended higher loan limits under the Pradhan Mantri MUDRA Yojana (PMMY), direct government equity support for MSMEs and stronger implementation of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme to improve credit availability and support business expansion.
Priority recommendations:
The priority recommendations of the industry body are Rationalisation of Capital Market Taxation, Revision of MSME NPA Classification Norms, Enhancement of PM MUDRA Loan Limits, Direct Equity Support to MSMEs, and Strengthening CGTMSE Implementation.
Rationalisation of Capital Market Taxation: Abolish LTCG tax on equity investments, reduce STCG tax from 20% to 10%, and lower STT rates to encourage long-term investment and improve India’s capital market competitiveness.
Revision of MSME NPA Classification Norms: Extend the overdue period for NPA classification from 90 to 180 days to accommodate longer working capital cycles and delayed realisation of receivables.
Enhancement of PM MUDRA Loan Limits: The Scheme was launched on April 8, 2015 with the objective of providing access to institutional collateral free credit to micro enterprises. 25405640 PMMY Loans have been sanctioned, amounting to Rs 343223.27 crore of which Rs 332413.04 Crore have been disbursed, as on November 2026 (provisional). Increase loan ceilings to Rs 1 lakh under Shishu, Rs 10 lakh under Kishore and Rs 20 lakh under Tarun/Tarun Plus categories to reflect rising project costs.
Direct Equity Support to MSMEs: Provide direct government equity investment through the Fund of Funds Scheme, with dedicated allocations for start-up seed capital and SME IPO participation.
Strengthening CGTMSE Implementation: Ensure effective collateral free lending through stricter compliance by banks and establish a centralized portal for tracking applications and monitoring rejection reasons.
“We acknowledge the Government’s initiatives to strengthen the industrial and MSME ecosystem, particularly through improved access to finance, credit guarantees, equity funding and resolution of delayed payments.”, said Anil Gupta, President, PHDCCI.
Dr. Ranjeet Mehta, SG & CEO, PHDCCI said, “We believe that ease of access to credit, equity support, rationalisation of taxation and strong implementation of Government schemes will foster faster growth of Indian industry as a global manufacturing hub.”
Pre-Budget 2027 Wishlist: Industry Body Pushes Tax Cuts, MSME Credit Reforms
