Cabinet Approves ₹10,000 Crore SME Growth Fund for Equity Investments
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). This initiative aims to provide direct equity investments in Small and Medium Enterprises (SMEs) to catalyze growth-oriented capital and enable the emergence of champion Indian enterprises across manufacturing, services, technology, innovation-driven sectors, and strategic value chains.
The fund addresses a structural gap in the availability of equity growth capital for Small and Medium Enterprises, as existing funds primarily focus on early-stage enterprises and micro enterprises. The SGF is designed to provide patient growth equity capital to high-potential SMEs with demonstrated business viability and scalability, particularly at critical inflection points in their growth journey.
Investment Focus and Allocation Strategy
The 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, supporting balanced regional industrial development and reinforcing local supply chains. The initiative is expected to improve scale, productivity, and strengthen export competitiveness by enabling manufacturing enterprises to expand capacity and adopt advanced technologies.
Strategic Objectives and Expected Outcomes
By providing long-term capital, the SGF 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 while generating high-quality employment opportunities across the country.
This initiative forms part of the holistic set of announcements made in Union Budget 2026-27 under Paragraph 28, focusing on providing equity, liquidity, and professional support for the MSME ecosystem as a whole. The government's commitment complements ongoing efforts to strengthen the SME sector through reforms, digitalization initiatives, credit support mechanisms, ease of doing business measures, public procurement reforms, startup promotion initiatives, and production-linked incentive programmes.