The Union Cabinet on Tuesday approved a government commitment of ₹10,000 crore to establish the SME Growth Fund (SGF), aimed at providing long-term capital to small and medium enterprises and helping them expand into globally competitive businesses.
The initiative is part of the measures announced in the Union Budget 2026-27 to strengthen India’s MSME sector by improving access to equity, liquidity and professional support.
The fund will address the shortage of long-term growth capital faced by SMEs. While many existing funds focus on early-stage companies and micro enterprises, small and medium businesses often struggle to secure financing for expanding operations, adopting new technologies and entering international markets.
Under the scheme, the government will commit ₹10,000 crore to an Alternative Investment Fund (AIF) created under the SGF framework. The fund will provide long-term equity capital to high-potential SMEs with established business models.
A major share of the fund will be allocated to manufacturing-focused SMEs. Businesses operating in industrial clusters in Tier-II and Tier-III cities will also be considered for support.
The initiative is expected to help SMEs increase manufacturing capacity, invest in technology, pursue acquisitions, enter overseas markets and become part of global value chains. It also aims to improve productivity and strengthen the export competitiveness of Indian businesses.
SMEs play an important role in employment generation, exports, manufacturing and innovation in India. However, limited access to long-term risk capital remains a major challenge for businesses looking to expand beyond their current scale.
The focus on industrial clusters in smaller cities is also expected to support regional industrial growth, strengthen local supply chains and create new employment opportunities.
According to the government, the SME Growth Fund will support the vision of Visit Bharat 2047 by promoting innovation-led industrialisation and helping build a new generation of globally competitive Indian businesses.
