New Delhi, 6 October : The Union Cabinet, on October 6 approved the Centre’s commitment of Rs 10,000 crore towards the establishment of the SME growth fund aimed at catalysing growth-oriented capital for India’s Small and Medium Enterprises (SMEs).
The fund aims to enable the emergence of champion Indian enterprises across manufacturing, services, technology, innovation-driven sectors, and strategic value chains. This was part of the holistic set of announcements that were made in the Union Budget 2026-27, focusing on providing equity, liquidity and professional support for the MSME ecosystem as a whole, according to an official statement.
There are existing funds which provide equity support, but the majority of them focus on early-stage enterprises and cover mainly micro enterprises, which leaves a structural gap for equity growth capital for small and medium enterprises.
The landmark initiative reflects the government’s commitment towards realising the vision of Viksit Bharat 2047 by 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 statement said.
Most of the allocation from SGF 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, the statement said.
By providing long-term capital, the initiative will enable Indian SMEs to scale 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.
SMEs constitute the backbone of the Indian economy, contributing significantly to employment generation, exports, manufacturing output, and innovation. While various initiatives have enhanced access to credit for SMEs, a gap remains in the availability of long-term risk capital required by enterprises seeking to scale, innovate, expand internationally, adopt advanced technologies, undertake acquisitions, and transform into industry leaders. The SME Growth Fund is designed to address this critical financing gap by providing patient growth equity capital to high-potential SMEs with demonstrated business viability and scalability, the statement explained.
Under the initiative, the Centre will provide an aggregate commitment of Rs.10,000 crore to the Alternative Investment Fund (AIF) established under the SGF framework. By enabling manufacturing enterprises to expand capacity, adopt advanced technologies and achieve greater scale, the SGF is expected to improve scale, productivity, and strengthen export competitiveness. Investments across industrial clusters, including those in Tier-II and Tier-III cities, will support balanced regional industrial development, reinforce local supply chains and generate high-quality employment opportunities.
