Cabinet approves Rs 10,000 crore SME Growth Fund, manufacturing to get bulk of support

New Delhi: The Union Cabinet on Tuesday approved a government commitment of Rs 10,000 crore to establish an SME Growth Fund (SGF), aimed at providing equity capital to small and medium enterprises seeking to expand their businesses.

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The fund, announced in the Union Budget, will support enterprises across manufacturing, services, technology, innovation-driven sectors and strategic value chains. The Cabinet meeting was chaired by Prime Minister Narendra Modi.

Briefing reporters, Information and Broadcasting Minister Ashwini Vaishnaw said the fund would operate in collaboration with the MSME Ministry and the Finance Ministry, with manufacturing SMEs receiving the bulk of the support.

Under the initiative, the government will commit an aggregate Rs 10,000 crore to an Alternative Investment Fund (AIF) established within the SGF framework.

The fund seeks to address a structural gap in growth-stage equity financing. Existing equity-support funds largely focus on early-stage businesses and micro enterprises, leaving small and medium enterprises with limited access to capital for scaling up, an official release said.

SGF will provide patient growth equity to high-potential SMEs with demonstrated business viability and scalability. It is expected to help manufacturing companies expand capacity, adopt advanced technologies, improve productivity and strengthen export competitiveness.

Investments will also cover industrial clusters in Tier-II and Tier-III cities, supporting regional industrial development, local supply chains and employment generation, the release said.

"By catalysing investment in high-growth SMEs, the fund will help create champions, drive innovation-led industrialisation, and generate quality employment opportunities across the country. The initiative will serve as a key pillar in advancing the vision of Viksit Bharat @ 2047," it said.

Vaishnaw highlighted the role of MSMEs in employment, exports and manufacturing, citing earlier measures to improve cash flow, ensure timely payments and ease access to loans.

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"For this reason, the Prime Minister has introduced several reforms, one after another, over the past 12 years. Among the biggest reforms have been aimed at improving the cash flow of MSMEs, particularly by ensuring that payments due to them, which were often delayed, are received on time," he said.

The minister also pointed to changes in the MSME definition and measures to improve credit access. The new fund, the release said, is intended to support enterprises at critical stages of their expansion.

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