As the government prepares the Union Budget for 2026–27, Deloitte India has urged policymakers to use the fiscal framework to address two structural vulnerabilities in the economy: constrained MSME export credit for micro, small and medium enterprises (MSME export credit) and India’s continued dependence on imported critical minerals.
In its pre-budget expectations, the consulting firm said the Budget presents an opportunity to strengthen India’s trade resilience at a time when global supply chains remain volatile and protectionist pressures are resurfacing in several key markets. Deloitte argued that targeted fiscal intervention, rather than broad-based incentives, would be essential to safeguard exports and secure long-term industrial competitiveness.
The recommendations come as India seeks to consolidate recent gains in manufacturing and exports while navigating geopolitical uncertainty, shifting trade rules and intensifying competition for strategic resources.
MSME Exports Face Persistent Credit Constraints
Deloitte highlighted that MSME export credit account for nearly 46 per cent of India’s total exports, yet continue to face persistent challenges in accessing affordable and timely export credit.
According to the firm, high borrowing costs and limited availability of long-tenure finance restrict the ability of smaller exporters to scale operations and compete effectively in international markets.
The firm noted that global trade uncertainty has disproportionately impacted MSME export credit, which operate on thinner margins and are more sensitive to currency fluctuations, freight costs and compliance burdens. In this context, Deloitte urged the government to expand MSME export credit support through concessional financing and more efficient credit delivery mechanisms in the upcoming Budget.
It added that without stronger financial backing, MSMEs risk losing market share just as India is positioning itself as an alternative manufacturing and sourcing hub amid shifts in global supply chains.
Fiscal Policy’s Significance in Export Competitiveness
Beyond credit availability, Deloitte stressed the need for fiscal measures that improve last-mile export competitiveness. The firm pointed to procedural complexity and compliance costs as barriers that prevent smaller firms from fully benefiting from existing export promotion schemes.
Deloitte suggested that the Budget should focus on simplifying access to export-related incentives and improving the efficiency of digital and financial infrastructure supporting MSME export credit. It argued that streamlined systems would allow exporters to respond faster to overseas demand and reduce transaction costs, particularly in labour-intensive sectors such as textiles, apparel and engineering goods.
The firm also underlined that targeted fiscal support, rather than blanket subsidies, would ensure better outcomes while maintaining budgetary discipline.
Critical Minerals Funding Flagged as Strategic Need
A second key concern raised by Deloitte relates to India’s dependence on imported critical minerals essential for clean energy, electronics, defence manufacturing and advanced technologies. The firm warned that limited domestic capacity and insufficient investment could expose Indian industries to supply disruptions and price volatility.
To address this, Deloitte called for concessional financing to support exploration, processing and recycling of critical minerals. It said the high capital intensity and long gestation periods associated with mineral projects often deter private investment, making fiscal support necessary to crowd in capital.
The firm also emphasised the importance of developing downstream processing and recycling capabilities, noting that mineral security depends not only on extraction but also on building complete value chains within the country.
Balancing Near-Term Growth with Long-Term Security
Deloitte framed its recommendations as part of a broader fiscal strategy that balances immediate economic priorities with long-term national interests.
While India’s growth outlook remains relatively strong, the firm cautioned that global trade fragmentation and competition for strategic resources require a more proactive policy response.
It argued that strengthening MSME export credit and securing access to critical minerals would reinforce India’s economic resilience without compromising fiscal prudence. According to Deloitte, such measures would support employment, enhance export stability and reduce strategic vulnerabilities in emerging industries.
As Budget 2026–27 approaches, the firm’s proposals add to a growing chorus calling for targeted, forward-looking fiscal policy—one that supports competitiveness today while safeguarding India’s position in an increasingly uncertain global economy.
