Cabinet clears Rs 10,000 crore SME Growth Fund to boost small and medium enterprises

The Union Cabinet, on Tuesday, approved the government’s commitment of Rs 10,000 crore to set up the SME Growth Fund (SGF) aimed at catalysing growth-oriented capital for small and medium enterprises (SMEs) in the country and enabling the emergence of champion Indian enterprises across manufacturing, services, technology, innovation-driven sectors, and strategic value chains. Union Minister Nirmala Sitharaman had announced it during the Union Budget 2026-27 as part of the initiatives strengthening the MSME sector in the country.

There are existing funds which provide equity support but majority of them focus on early-stage enterprises and cover majorly micro enterprises.

SMEs are the backbone of the Indian economy, contributing significantly to employment generation, exports, manufacturing output, and innovation. While various initiatives have enhanced access to credit for SMEs, a gap remains in the availability of long-term risk capital required by enterprises seeking to scale, innovate, expand internationally, adopt advanced technologies, undertake acquisitions, and transform into industry leaders.


As per the release by the finance ministry, the SME Growth Fund is designed to address this critical financing gap by providing patient growth equity capital to high-potential SMEs with demonstrated business viability and scalability.

The SME Growth Fund is envisioned as a transformational instrument to support enterprises at critical inflection points in their growth journey. Majority allocation from the fund will be made towards small and medium manufacturing focused enterprises. The SME Growth Fund will also consider SME’s operating in industrial clusters in Tier II and Tier III cities.

By providing long-term capital, the initiative 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 ministry said in the release. The government expects the SME Growth 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, the ministry added.

Under the initiative, the government will provide an aggregate commitment of Rs 10,000 crore to the Alternative Investment Fund (AIF) established under the SME Growth Fund framework. By enabling manufacturing enterprises to expand capacity, adopt advanced technologies and achieve greater scale, the SME Growth Fund is expected to improve scale, productivity, and strengthen export competitiveness. Investments across industrial clusters, including those in Tier II and Tier III cities, will support balanced regional industrial development, reinforce local supply chains and generate high-quality employment opportunities.