Cabinet Approves Rs 10,000 Crore SME Growth Fund to Boost Growth and Competitiveness

According to an official statement, the initiative is designed to support the emergence of Indian enterprises capable of competing globally across manufacturing, services, technology, innovation-driven industries and strategic value chains.

The fund is part of a broader set of measures announced in the Union Budget 2026-27 to strengthen the MSME ecosystem by improving access to equity, liquidity and professional support.

The government said existing funds provide equity support to businesses, but many primarily focus on early-stage companies and micro enterprises. This has left a gap in the availability of growth-stage equity capital for small and medium enterprises seeking to scale their operations.

Under the new initiative, the Centre will provide an aggregate commitment of Rs 10,000 crore to an Alternative Investment Fund established under the SGF framework.

A significant portion of the fund's allocation is expected to go towards small and medium enterprises focused on manufacturing. The scheme will also consider SMEs operating in industrial clusters in Tier-II and Tier-III cities.

The government said the availability of long-term capital would help eligible enterprises expand their operations, invest in technology and manufacturing capacity, enter international markets and become more integrated with global value chains.

The fund is also expected to support strategic investments and help build a pipeline of Indian companies with the scale, innovation capabilities and competitiveness required to become leaders in their respective sectors.

SMEs play a significant role in India's economy, contributing to employment, exports, manufacturing and innovation. While government initiatives have expanded access to conventional credit, the availability of long-term risk capital remains a challenge for businesses looking to scale, adopt advanced technologies, expand overseas or undertake acquisitions.

The SME Growth Fund is intended to address this financing gap by providing patient growth equity to high-potential SMEs with established business models and the ability to scale.

The government expects the fund to help manufacturing companies expand capacity, adopt advanced technologies and achieve greater scale, thereby improving productivity and export competitiveness.

Investments in industrial clusters, including those located in Tier-II and Tier-III cities, are also expected to support regional industrial development, strengthen local supply chains and create employment opportunities.

The Centre said the initiative would help catalyse investment in high-growth SMEs, promote innovation-led industrialisation and support the creation of Indian companies capable of developing into global competitors.

The SME Growth Fund is being positioned by the government as a key component of its broader objective of strengthening India's entrepreneurship ecosystem, deepening domestic capital markets for growth-stage enterprises and advancing the vision of Viksit Bharat 2047.