Cabinet Clears ₹10,000 Cr SME Fund To Back Manufacturing, Tech Focused SMEs

The Union Cabinet, presided over by Prime Minister Narendra Modi, has authorized the Indian government's ₹10,000 Cr SME Growth Fund (SGF). This fund aims to provide growth capital to small and medium enterprises (SMEs) in high-potential sectors such as manufacturing, technology, and strategic value chains. The majority of the fund's allocation will be directed towards manufacturing-focused enterprises.

The SGF intends to enhance access to equity and liquidity for MSMEs, enabling them to scale up and become globally competitive businesses.

The fund will be financed through alternative investment funds (AIFs) with an initial commitment of ₹10,000 Cr. By providing growth capital to SMEs, the government aims to bridge the gap in funding that exists for businesses beyond early-stage and micro enterprises. This initiative will enable enterprises to expand their operations, boost manufacturing capacity, adopt new technologies, enter international markets, and integrate into global supply chains.

As part of the broader government effort to support the MSME sector, the SGF aligns with several other initiatives. These efforts include improving credit availability, digitalization, ease of doing business, public procurement, and supporting local supply chains and job creation in industrial clusters across Tier II and Tier III cities.

The 'Creating Champion MSMEs' strategy, proposed in Budget 2026-27, also includes an additional ₹2,000 Cr for a 'Self-Reliant India Fund' to assist micro enterprises with access to risk capital.

India's MSME sector is a significant contributor to the country's economy, accounting for about 35.4% of manufacturing, 48.58% of exports, and 31.1% of India's GDP. With over 7.47 crore enterprises employing more than 32.82 crore individuals, the sector is the second-largest employer in India, following agriculture. The Economic Survey 2025-26 emphasizes the importance of the MSME sector in enabling effective supply-chain participation, fostering local value addition, and promoting inclusive regional growth.