As the Union Budget 2026-27 approaches, expectations from the MSME sector have increased. Nearly one-third of India’s GDP and nearly 50% of its exports come from MSMEs, but in FY26 the sector struggled with global tensions, US tariffs, increasing compliance burden and credit crunch. The inverted duty structure after GST 2.0 has trapped working capital in GST refunds. FISME is demanding fast automatic GST refund, tax rate balancing and less compliance. Due to US tariffs, exporters’ sales have fallen by 50–60%, leading to the risk of loan defaults. MSMEs want cheap loans, collateral-free credit, 30% micro units in government procurement and stable policies.