Infrastructure Plans in Budget 2025–26 to Boost MSME Growth and Development

Union Budget 2025-26 places a emphasis on infrastructure to bolster MSME growth—funding better roads, logistics parks, power supply, and industrial clusters that directly affect how small businesses operate and scale.

India has over 6.3 crore MSMEs. For many of them, poor infrastructure has been a constant drag—raising costs, delaying shipments, and limiting access to new markets. The Budget addresses these restrictions head-on, offering long-overdue fixes to everyday inefficiencies.

In this article, you’ll find an in-depth look at the infrastructure funds allocated in Budget 2025–26, the potential impact on MSME growth, and how services like CFO consulting could play a crucial role in helping MSMEs align their financial strategy with these upcoming changes.

Why MSME Competitiveness Still Hinges on Infrastructure?

India’s MSMEs don’t lack product demand. What they lack is the operational stability to fulfill it consistently—and at a cost that keeps them competitive. The real constraint lies in infrastructure that hasn’t adapted to the evolving needs of these businesses.

Unlike large corporations, MSMEs can’t build private logistics fleets or fund dedicated power backups. Their operations depend heavily on shared, public infrastructure—and when that’s weak, business growth doesn’t just slow down; it stalls.

Here’s how infrastructure limitations show up in day-to-day operations:

• Freight costs eat into margins: India’s logistics expenses remain at 13–14% of GDP, compared to the global average of 8%. For businesses looking to optimize costs and improve financial forecasting, Fractional CFO services can offer tailored financial oversight that helps minimize the impact of these rising costs.

• Industrial space is often inaccessible: Affordable industrial land often lacks proper zoning or essential utilities. MSMEs end up in informal clusters without long-term scalability or compliance viability.

• Power and internet disruptions reduce uptime: This isn’t a rural issue anymore. Even in mid-sized manufacturing towns, intermittent power and unreliable broadband slow down production cycles and break vendor timelines. Fractional CFO consultants can help MSMEs assess the financial risks associated with these disruptions and implement strategies for more resilient cash flow management.

Each of these challenges reduces an MSME’s ability to scale, qualify for export partnerships, or meet the consistency requirements of formal supply chains.

The proposals in Budget 2025–26 directly tackle the core challenges MSMEs face. Unlike previous years that leaned heavily on credit infusion or subsidy-based support, this year’s budget looks at the structural backbone MSMEs need to grow predictably: better logistics, stronger digital access, stable utilities, and industry-specific zones that reduce the friction of starting up, scaling, and selling.

Five Infrastructure Provisions in Budget 2025–26 MSMEs Should Track Closely

Here’s what stands out in the Union Budget’s infrastructure focus—and why it matters if you run or support an MSME operation.

1. ₹11.21 Lakh Crore in Capital Outlay for Infrastructure

The government has allocated ₹11.21 lakh crore—approximately 3.1% of the national GDP—for capital expenditure on core infrastructure. This includes roads, freight corridors, energy access, urban transport, and digital logistics systems.

This amount, in practice, determines which regions become commercially viable for consistent inter-state operations. For MSMEs, that translates into fewer logistical blind spots and more predictable shipping outcomes—not faster, but reliable. Uncertainty in shipment timing currently prevents small manufacturers from negotiating better credit cycles or tapping into volume-based buyers who require strict dispatch schedules.

In regions like Morbi, where ceramic production is consolidated but distribution depends on long-haul connectivity, freight corridors directly influence whether southbound orders reach on time or fall through. When a distributor in Kochi starts factoring Morbi’s tile suppliers into weekly procurement, it’s not a sales focus—it’s a logistics confidence that didn’t exist before. That shift doesn’t happen through marketing. It happens when physical delivery becomes systemic, not situational.

For MSMEs, reliable logistics and predictable delivery schedules are often more crucial than direct funding. When supply chains become more dependable, businesses can negotiate better credit terms and access larger, more consistent markets. This shift from uncertainty to reliability unlocks growth potential that’s far more sustainable than temporary financial support.

2. ₹1.5 Lakh Crore in Interest-Free Loans to States for Infrastructure Projects

In 2024, an MSME garment unit in Tiruppur lost its lease on a small industrial space after the landlord decided to repurpose the land. The business was growing, orders were steady, but there was nowhere to move on short notice. No state-managed cluster nearby had space, and private parks were priced for exporters—not domestic producers.

This isn’t an isolated case. It reflects a deeper friction MSMEs face: growth often stalls not for lack of opportunity but for lack of supporting infrastructure that reflects their realities.

The ₹1.5 lakh crore allocated for interest-free loans to states, as announced in the Union Budget, is a crucial policy measure aimed at enhancing infrastructure development across the country. This allocation supports states in improving critical infrastructure that will positively impact MSME operations by filling existing gaps and improving overall operational efficiency.

Each state can now apply this funding toward small-format industrial zones, testing labs, logistics hubs, and common power or effluent treatment setups. But what MSMEs should note is not just that these funds exist—but how states choose to use them will vary. The same scheme could build a high-utility cold chain hub in Nagpur—or a stalled mega park on the city outskirts that no one uses.

This is not a policy to passively monitor. MSMEs can play a more active role by:

• Track state DPIIT websites and industry notifications. Land zoning, cluster tenders, and initial MoUs are often declared months before implementation.

• Engage with industrial associations that participate in the planning stages of such parks. Early awareness = early access.

• Push for micro-utility infrastructure, not just real estate. Cold storage, warehousing, customs support, and waste handling matter more than decorative buildouts.

Whether this ₹1.5 lakh crore becomes operational value or dormant capital will come down to state execution—and MSME alignment. The businesses that get in early, understand location dynamics, and use the ecosystem collaboratively will be the ones that benefit first.

3. ₹25,000 Crore Maritime Development Fund

Export-ready MSMEs aren’t held back by production limits anymore. They meet compliance, match global specs, and have demand pipelines in place. What breaks down is the infrastructure that connects them to the port—and the port to the ship.

Customs delays. Route detours. Last-mile congestion. These aren’t outlier issues. They’re consistent enough to cost repeat business.

The ₹25,000 crore allocated to maritime infrastructure through the Maritime Development Fund aims to address key gaps in the sector, focusing on enhancing indigenous shipbuilding and blue water infrastructure. While the primary objectives include promoting competition and supporting the maritime industry, these improvements may indirectly lead to more efficient operations, potentially resulting in faster turnaround times, better-integrated inland logistics, and more reliable dispatch routes for time-sensitive cargo. 

The proposed fund covers three layers:

• Modernizing major and minor ports to increase clearance efficiency.

• Improving last-mile rail-port-road linkages, especially for inland production zones.

• Digitizing port operations, reducing manual delays in documentation and container handling.

For MSMEs, the impact is not in percentages—it’s in outcomes: Whether an order is fulfilled on time, whether a buyer comes back, or whether a shipment gets rerouted through a private logistics provider at double the cost.

If the fund enables real-time customs updates, streamlined ICD-to-port movements, and green channel clearances for certified exporters, it will create a stability layer MSMEs have never had. A delay today doesn't just affect one shipment—it derails projections, payments, and manufacturing timelines for the next two quarters.

What needs attention now is how the rollout prioritises integrated freight corridors, ICD upgrades, and automation at high-traffic terminals—not just new cranes and port facades. MSMEs should map which ports and corridors their sectors typically rely on and monitor infrastructure tenders in those zones.

This isn’t a fund to make exports easier. It’s a fund to stop penalising small exporters for system failures beyond their control.

4. Expansion of UDAN Scheme – 120 New Routes Approved

The government has authorized the establishment of 120 new regional air cargo routes under the UDAN scheme. While this may seem like an update pertaining solely to civil aviation, it is of significant importance to MSMEs in underserved areas, as it facilitates their access to formal buyers, medical institutions, and expanding regional markets.

Most small and mid-sized manufacturers don’t operate near ports or major logistics hubs. They ship from Tier 2 and Tier 3 towns—often relying on slow-moving ground freight that eats up delivery time, adds handling risk, and narrows the business pipeline to metro-centric buyers. For product categories that require controlled transport or faster cycles—like pharma inputs, speciality food, nutraceuticals, or electronics accessories—those gaps have meant lost opportunity.

Cargo-specific UDAN routes begin to close that loop. They won’t replace rail or truck logistics, but they create a new layer of velocity for time-sensitive or high-value goods where margins rely on turnaround, not scale. An MSME in Ahmedabad producing nutraceuticals, for example, can now move products directly to health-focused distribution centres in Assam or Meghalaya—markets that were once commercially out of reach due to cost and time.

This changes how such businesses view regional expansion. Instead of building demand through expensive distributor networks, MSMEs can now test volumes, pilot delivery schedules, and learn from early feedback—all without over-investing in infrastructure or inventory.

But access alone doesn’t translate to usage. What MSMEs need to assess now:

• Which UDAN-linked airports will support cargo terminals, not just passenger growth.

• Whether freight handling at these airports meets basic standards for packaging, cold storage, and bulk dispatch.

• And if state-level export boards are offering any co-location benefits or incentives around these terminals.

Used well, these routes don’t just extend market reach. They allow businesses to change how and where they sell—without compromising delivery commitments or price stability.

5. BharatTradeNet + Export Promotion Mission

Before BharatTradeNet, small exporters had to manage six different systems: DGFT for licensing, ICEGATE for customs, GST portals for refunds, courier aggregators for tracking, and offline consultants for compliance help. Each platform had its own process, and none of them talked to each other.

Before the Export Promotion Mission, getting clarity on packaging norms, buyer expectations, or logistics benchmarking meant trial, error, and a lot of wasted product.

So even when MSMEs had the product and the intent to export, they lacked the operational visibility and digital control to follow through. Now, these two initiatives attempt to change that baseline—not by offering new subsidies or entitlements, but by removing procedural fragmentation.

BharatTradeNet (BTN) is set to be established as a unified digital platform for international trade documentation and financing solutions, aiming to simplify and streamline export procedures for MSMEs. While specific functionalities are yet to be fully detailed, BTN is expected to support MSMEs by providing a centralized interface for managing various aspects of international trade.

The Export Promotion Mission adds the human layer—sector-specific mentoring, skilling, and compliance guidance for MSMEs who don’t have the budget to hire export consultants or market researchers.

The combined effect isn’t just convenience. Its capability.

What MSMEs should consider:

• Register early once BharatTradeNet launches to access pilot-phase integrations and export readiness assessments.

• Align packaging and documentation formats with Export Promotion Mission guidelines—especially if entering new regions like the EU, where standards are strict but predictable.

• Treat these tools as enablers of lean international operations, not as government add-ons. The firms that automate early will scale early.

Exporting is no longer solely about product suitability; it increasingly depends on the level of manual effort a business is prepared to handle. These initiatives significantly reduce that effort, providing MSMEs with a critical infrastructure that can greatly enhance their operational efficiency.

How to Prepare for Infrastructure-Led Transitions

Policy changes occur rapidly, but infrastructure development is a long-term process. This disparity creates an opportunity for strategic planning and preparation.

Each of the five budget interventions opens the door to new market access, logistics improvements, or export channels—but they’re staggered across ministries, state bodies, and implementation timelines. To position effectively, MSMEs don’t need to chase schemes. They need to read signals and act where outcomes are likely.

Here’s what that looks like in practice:

• Track State-Level Schemes: State budgets and DPIIT announcements often reveal where industrial clusters will emerge first. Get on the map early.

• Map “Plug-and-Play” Zones: Over 16 new MSME clusters are under evaluation. If you're in textiles, electronics, or auto parts—watch closely.

• Register for BharatTradeNet: Once live, this portal becomes your export ops HQ. From customs to GST reconciliation, it centralises everything.

• Collaborate to Cut Costs: MSMEs that pool logistics, warehousing, or procurement through local associations see significant cost reductions—long before infrastructure upgrades kick in.

Final Thought 

The 2025–26 Union Budget sets the stage for MSMEs by unlocking new capacity and presenting fresh opportunities. As MSMEs adapt to these changes, Fractional CFO services play a crucial role in navigating the evolving financial landscape, helping businesses align their strategies with these infrastructure-driven opportunities.

CFO Bridge supports MSMEs in adapting to these policy shifts by refining financial models, streamlining cost structures, and aligning capital strategies with growth objectives. Through structured guidance and execution-ready financial frameworks, we help businesses scale with clarity and control.