The government has approved a Rs 10,000 crore fund to accelerate the growth of small and medium enterprises (SMEs) across the country, with the aim of providing equity capital to businesses in this segment.

At a Union Cabinet meeting chaired by Prime Minister Narendra Modi, the government approved the establishment of the SME Growth Fund (SGF), which is intended to catalyse growth-oriented capital for SMEs.

According to a government statement, the fund will help foster the emergence of champion Indian enterprises across manufacturing, services, technology, innovation-driven industries and strategic value chains.

The initiative is part of the measures announced in the Union Budget 2026-27 to strengthen the MSME ecosystem through greater access to equity, liquidity and professional support.

The government noted that while several existing funds provide equity support, most are focused on early-stage businesses and primarily cater to micro enterprises. This has resulted in a structural gap in the availability of growth-stage equity capital for SMEs.

The SME Growth Fund is aimed at bridging this financing gap by providing patient growth equity to high-potential SMEs that have demonstrated business viability and the ability to scale.

The fund is expected to support the emergence of a new generation of Indian companies capable of competing in global markets, the government said.

A majority of the SME Growth Fund’s allocation will be directed towards small and medium-sized manufacturing enterprises. The fund will also consider SMEs operating in industrial clusters across Tier II and Tier III cities.

By providing long-term capital, the initiative is expected to help Indian SMEs scale their operations, invest in technology and expand manufacturing capacity, enter international markets, integrate with global value chains and undertake strategic investments, the statement said.

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