The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the government’s ₹10,000 Cr SME Growth Fund (SGF) to offer growth credit capital to small and medium enterprises.

Announced in Budget 2026-27, the fund will invest in high-potential SMEs across manufacturing, services, technology, innovation-driven sectors and strategic value chains. A majority of the allocation of the fund will go towards manufacturing-focused enterprises.

The initiative aims to widen access to equity and liquidity for MSMEs and help promising Indian businesses scale into globally competitive companies.

The SGF is meant to fill the gap in growth capital for SMEs, as most existing funds focus on early-stage and micro enterprises. Under the framework, the government will commit ₹10,000 Cr to alternative investment funds (AIFs), that will subsequently invest in high-potential SMEs.

This will help businesses expand operations, increase manufacturing capacity, adopt new technologies, enter international markets and integrate into global supply chains.

The SGF is part of the government’s wider push to support the MSME sector via credit, digitalisation, ease of doing business, public procurement and other initiatives.

The fund will also support SMEs in industrial clusters across Tier II and Tier III cities, with the aim of strengthening local supply chains and creating jobs.

As part of the ‘Creating Champion MSMEs’ strategy announced in Budget 2026-27, finance minister Nirmala Sitharaman had also proposed an additional ₹2,000 Cr for ‘Self-Reliant India Fund’ to support micro enterprises and provide them with access to risk capital.

The Budget also proposed several measures to improve cash flow for MSMEs through the Trade Receivables e-Discounting System (TReDS).

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