Union Cabinet clears ₹10,000cr fund to help SMEs grow
What's the story
The Union Cabinet has approved a massive ₹10,000 crore SME Growth Fund. The primary purpose of this fund is to make direct equity investments in small and medium enterprises (SMEs). The move is aimed at creating 'future champions' and helping these businesses scale their operations and expand globally. The initiative will provide long-term capital to enable SMEs to invest in technology and integrate into global value chains.
Operational details
Fund will be implemented through an AIF structure
The SME Growth Fund will be implemented through an Alternative Investment Fund (AIF) structure.
The government will make a total commitment of ₹10,000 crore to the AIF under the SGF.
This fund was first announced in the Union Budget for 2026-27 and is part of a larger strategy to create champion Indian enterprises across sectors like manufacturing, services, technology, innovation-driven sectors, and strategic value chains.
Sector impact
Majority of fund allocation to go toward manufacturing-focused SMEs
The SME Growth Fund will play a key role in boosting India's SME sector.
By providing long-term capital, it 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 majority of the fund's allocation will go toward manufacturing-focused SMEs but will also support enterprises across services and technology-driven sectors.
Financial support
Government's commitment to enhance liquidity support for MSMEs
The government has also committed to providing ₹24,566.27 crore to the Ministry of Micro, Small and Medium Enterprises.
This is part of a three-pronged approach under its "Creating Champion MSMEs" strategy.
Finance Minister Nirmala Sitharaman had proposed measures to enhance liquidity support and accessibility to risk capital for these enterprises.
The MSME Champions Scheme aims at identifying select enterprises and upgrading their processes, improving competitiveness, and supporting growth in domestic and international markets.