The Union Cabinet has approved a ₹10,000 crore commitment for the SME Growth Fund (SGF) to provide direct equity and long-term growth capital to promising Small and Medium Enterprises. The fund will support manufacturing, technology adoption, capacity expansion, exports and innovation, including SMEs operating in Tier-II and Tier-III cities, with the aim of creating globally competitive Indian enterprises.
The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a ₹10,000 crore Government of India commitment towards the establishment of the SME Growth Fund (SGF), as announced under Para 28 of the Union Budget 2026-27.
The fund is intended to provide direct equity investment and long-term growth capital to promising Small and Medium Enterprises (SMEs). The initiative seeks to address the existing shortage of equity funding available to growth-stage SMEs, particularly businesses that require capital to expand operations, adopt advanced technologies, increase manufacturing capacity, enter international markets or strengthen their position in global value chains.
A significant portion of the fund is expected to support small and medium manufacturing enterprises. SMEs operating within industrial clusters in Tier-II and Tier-III cities will also be considered, supporting wider regional industrial development and strengthening local supply chains.
Under the framework, the Government will commit an aggregate ₹10,000 crore to an Alternative Investment Fund (AIF) established for the SME Growth Fund. The capital is expected to help viable enterprises scale their businesses, improve productivity, undertake strategic investments and develop greater export competitiveness.
The initiative is also aimed at supporting the emergence of Indian enterprises capable of becoming leaders in their respective sectors. By providing patient growth equity, the fund is expected to facilitate technology adoption, capacity expansion, internationalisation and innovation among high-potential SMEs.
The SME Growth Fund forms part of the Government's broader measures to strengthen the MSME ecosystem, including credit support, digitalisation, ease-of-doing-business reforms, public procurement initiatives, startup promotion and production-linked incentive programmes.
The Government expects the initiative to contribute to employment generation, innovation-led industrial growth, stronger domestic supply chains and the development of globally competitive Indian enterprises, supporting the broader objective of Viksit Bharat @ 2047. CASansaar