Cabinet approves Rs 10,000 crore SME Growth Fund for small and medium enterprises

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved a SME Growth Fund with an outlay of Rs 10,000 crore to support micro, small and medium enterprises (MSMEs) in the country.

The fund, announced under Budget 2026-27, is a part of the government’s three-pronged approach under its “Creating Champion MSMEs" strategy.

The SME Growth Fund will enable SMEs to scale operations, expand manufacturing capacity and adopt advanced technologies and support entry into international markets, integration into global value chains and stronger export competitiveness.


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Under this initiative, the government will provide patient capital for innovation, acquisitions and strategic investments needed to become industry leaders and support employment generation through capacity expansion and scaling up of SMEs, while strengthening local supply chains.

The SME Growth Fund, approved by the Cabinet, will provide long-term equity capital to high-potential SMEs with demonstrated business viability and the ability to scale.

SGF will address the shortage of growth capital for Small and Medium Enterprises, the government said. The majority of the Fund's allocation will go towards manufacturing-focused SMEs and will also support enterprises across services, technology, innovation-driven sectors and strategic value chains.

MSMEs account for 35.4% of manufacturing, 48.58% of exports, and 31.1% of GDP in India; with 7.47 crore+ enterprises employing 32.82 crore+ persons.

The announcement comes under the first pillar of ‘Equity Support’ wherein Finance Minister Nirmala Sitharaman introduced a dedicated Rs 10,000 crore SME Growth Fund, to create future Champions, incentivizing enterprises based on select criteria.

Sitharaman also proposed to top up the Self-Reliant India Fund set up in 2021, with Rs 2,000 crore to continue support to micro enterprises and maintain their access to risk capital.

Under the three-pronged approach, the finance minister also unveiled ‘Liquidity support’ measures with four key initiatives.

The minister proposed to mandate Trade Receivables e-Discounting System (TReDS) as the transaction settlement platform for all purchases from MSMEs by CPSEs, serving as a benchmark for other corporates.

She further proposed to introduce a credit guarantee support mechanism through Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) for invoice discounting on TReDS platform.

The Budget proposals included linking Government e-Marketplace with TReDS for sharing information with financiers about government purchases from MSMEs, encouraging cheaper and quicker financing.

Sitharaman also proposed to introduce TReDS receivables as asset-backed securities, helping develop a secondary market, enhancing liquidity and settlement of transactions.

The MSME Champions Scheme aims to identify and nurture select enterprises by upgrading their processes, minimizing inefficiencies, improving competitiveness, and supporting their growth to achieve excellence in both domestic and international markets.

Under the latest Budget, the government allocated Rs 24,566.27 crore to the Ministry of Micro, Small and Medium Enterprises, comprising Rs 22,647.26 crore in revenue expenditure and Rs 1,919.01 crore in capital expenditure.