New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Government of India’s commitment of ₹10,000 crore towards the establishment of the SME Growth Fund (SGF).
The fund will provide direct equity investments in Small and Medium Enterprises (SMEs), with the aim of catalysing growth-oriented capital and enabling the emergence of champion Indian enterprises.
The approval is in line with Para 28 of the Union Budget 2026-27 and forms part of a broader set of announcements focused on providing equity, liquidity and professional support to the MSME ecosystem.
SME Growth Fund to Address Equity Gap for Small and Medium Enterprises
The SME Growth Fund has been designed to address a structural gap in the availability of equity growth capital for Small and Medium Enterprises.
While existing funds provide equity support to enterprises, the majority focus on early-stage businesses and primarily cover Micro enterprises.
The SME Growth Fund will instead focus on providing patient growth equity capital to high-potential SMEs with demonstrated business viability and scalability.
The initiative is aimed at strengthening India’s entrepreneurship ecosystem, deepening the domestic capital market for growth-stage enterprises and creating a new generation of Indian companies capable of competing at the global level.
The landmark initiative reflects the Government’s commitment towards realising the vision of Viksit Bharat 2047.
SME Growth Fund to Support Manufacturing and Growth-Oriented Enterprises
SMEs constitute the backbone of the Indian economy, contributing significantly to employment generation, exports, manufacturing output and innovation.
While various government initiatives have improved access to credit for SMEs, a gap remains in the availability of long-term risk capital for enterprises looking to scale operations, innovate, expand internationally, adopt advanced technologies, undertake acquisitions and transform into industry leaders.
The SME Growth Fund is designed to address this financing gap by providing long-term growth equity capital to SMEs at critical stages of their growth journey.
The Fund is envisioned as a transformational instrument for enterprises at critical inflection points in their expansion. A majority allocation from the SME Growth Fund will be made towards small and medium manufacturing-focused enterprises.
The Fund will also consider SMEs operating in industrial clusters in Tier-II and Tier-III cities.
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₹10,000 Crore Government Commitment Under SME Growth Fund
Under the initiative, the Government of India will provide an aggregate commitment of ₹10,000 crore to the Alternative Investment Fund (AIF) established under the SME Growth Fund framework.
By providing long-term capital, the SME Growth Fund will enable Indian SMEs to scale their operations, invest in technology and manufacturing capacity, expand into international markets, integrate into global value chains and undertake strategic investments.
The Government expects the Fund to accelerate the emergence of a strong pipeline of Indian companies with the scale, innovation capability and competitiveness required to become champions in their respective sectors.
SME Growth Fund to Strengthen Manufacturing and Export Competitiveness
The SME Growth Fund is expected to support manufacturing enterprises in expanding capacity, adopting advanced technologies and achieving greater scale.
The initiative is aimed at improving scale and productivity while strengthening export competitiveness among Indian SMEs.
Investments across industrial clusters, including those located in Tier-II and Tier-III cities, will support balanced regional industrial development, reinforce local supply chains and generate high-quality employment opportunities.
The focus on manufacturing and industrial clusters is expected to support SMEs at critical stages of expansion while strengthening their ability to participate in domestic and global value chains.
Fund Complements Government’s MSME Support Measures
The Government’s commitment to the SME Growth Fund complements its ongoing efforts to strengthen the SME sector through reforms, digitalisation initiatives, credit support mechanisms, ease of doing business measures, public procurement reforms, startup promotion initiatives and production-linked incentive programmes.
The Fund will provide an additional avenue for growth-stage enterprises seeking long-term capital to expand their businesses and enhance their competitiveness.
By catalysing investment in high-growth SMEs, the SME Growth Fund is intended to support the emergence of competitive Indian enterprises across manufacturing, services, technology, innovation-driven sectors and strategic value chains.
SME Growth Fund to Create Future Indian Champions
With the initiative, the Government has reaffirmed its commitment to empowering Indian entrepreneurs and fostering a new generation of competitive enterprises.
The SME Growth Fund will help create champions, drive innovation-led industrialisation and generate quality employment opportunities across the country by catalysing investment in high-growth SMEs.
The initiative is positioned as a key pillar in advancing the vision of Viksit Bharat @ 2047 and strengthening India’s entrepreneurship ecosystem and domestic capital markets for growth-stage enterprises.
