The Union Cabinet on Tuesday approved a government commitment of Rs 10,000 crore towards establishing the SME Growth Fund (SGF), a major equity-support initiative aimed at providing long-term growth capital to promising small and medium enterprises and creating a new generation of globally competitive Indian companies.
The Cabinet, chaired by Prime Minister Narendra Modi, cleared the initiative after it was announced as part of the Union Budget 2026-27 as one of the measures to strengthen the MSME ecosystem through improved access to equity, liquidity and professional support. Union Minister for Information and Broadcasting Ashwini Vaishnaw announced the decision after the meeting.
How the fund will work
The Cabinet decision gives effect to the Budget announcement and seeks to address a structural gap in the availability of growth-stage equity for SMEs. While several existing funds provide equity support, the government said these are largely focused on early-stage enterprises and predominantly cover micro enterprises, leaving small and medium businesses with limited access to long-term risk capital.
Under the approved framework, the government will commit an aggregate of Rs 10,000 crore to an Alternative Investment Fund established under the SME Growth Fund framework. The fund is intended to provide patient growth equity to enterprises with demonstrated business viability and the potential to scale, financing capacity expansion, technology adoption, innovation, acquisitions and strategic investments needed to become industry leaders.
Where the money goes
The majority of the fund's allocation will go to manufacturing-focused SMEs, while enterprises in services, technology, innovation-driven sectors and strategic value chains will also be supported. The fund will also consider SMEs operating in industrial clusters in Tier II and Tier III cities.
The approval is part of the government's three-pronged "Creating Champion MSMEs" strategy. The fund aims to help businesses expand production, adopt advanced technologies, enter overseas markets, integrate into global value chains and improve export competitiveness, while generating jobs and strengthening local supply chains.
The initiative comes against the backdrop of the sector's weight in the economy: according to government figures, MSMEs account for 35.4% of manufacturing, 48.58% of exports and 31.1% of GDP. More than 7.47 crore enterprises in the sector employ over 32.82 crore people, making it India's second-largest employer after agriculture.
Sources:
- Financial Express: Cabinet approves Rs 10,000 crore SME Growth Fund to boost expansion, technology
- Economic Times: Cabinet approves Rs 10,000 crore SME Growth Fund for small and medium enterprises
The Cabinet, chaired by Prime Minister Narendra Modi, cleared the initiative after it was announced as part of the Union Budget 2026-27 as one of the measures to strengthen the MSME ecosystem through improved access to equity, liquidity and professional support. Union Minister for Information and Broadcasting Ashwini Vaishnaw announced the decision after the meeting.
How the fund will work
The Cabinet decision gives effect to the Budget announcement and seeks to address a structural gap in the availability of growth-stage equity for SMEs. While several existing funds provide equity support, the government said these are largely focused on early-stage enterprises and predominantly cover micro enterprises, leaving small and medium businesses with limited access to long-term risk capital.
Under the approved framework, the government will commit an aggregate of Rs 10,000 crore to an Alternative Investment Fund established under the SME Growth Fund framework. The fund is intended to provide patient growth equity to enterprises with demonstrated business viability and the potential to scale, financing capacity expansion, technology adoption, innovation, acquisitions and strategic investments needed to become industry leaders.
Where the money goes
The majority of the fund's allocation will go to manufacturing-focused SMEs, while enterprises in services, technology, innovation-driven sectors and strategic value chains will also be supported. The fund will also consider SMEs operating in industrial clusters in Tier II and Tier III cities.
The approval is part of the government's three-pronged "Creating Champion MSMEs" strategy. The fund aims to help businesses expand production, adopt advanced technologies, enter overseas markets, integrate into global value chains and improve export competitiveness, while generating jobs and strengthening local supply chains.
The initiative comes against the backdrop of the sector's weight in the economy: according to government figures, MSMEs account for 35.4% of manufacturing, 48.58% of exports and 31.1% of GDP. More than 7.47 crore enterprises in the sector employ over 32.82 crore people, making it India's second-largest employer after agriculture.
Sources:
- Financial Express: Cabinet approves Rs 10,000 crore SME Growth Fund to boost expansion, technology
- Economic Times: Cabinet approves Rs 10,000 crore SME Growth Fund for small and medium enterprises
