The Union Cabinet has approved a government commitment of ₹10,000 crore to establish the SME Growth Fund, aimed at providing direct equity investment to small and medium enterprises and supporting their expansion into globally competitive businesses.
Announced in the Union Budget 2026–27, the fund will mobilise growth capital for enterprises across manufacturing, services, technology, innovation-driven sectors and strategic value chains. The government will make the ₹10,000 crore commitment to an Alternative Investment Fund established under the SME Growth Fund framework.
The initiative is designed to address the gap in long-term equity financing available to growth-stage SMEs. While existing equity-support programmes largely cater to early-stage businesses and micro enterprises, the new fund will focus on companies with demonstrated viability and scalability that require capital to expand.
The fund will provide patient, long-term growth equity to support capacity expansion, technology adoption, innovation, acquisitions and international expansion. A majority of the allocation is expected to support manufacturing-focused SMEs, including businesses operating in industrial clusters across Tier-II and Tier-III cities.
The government expects the investments to help SMEs improve productivity, enter international markets, strengthen their participation in global value chains and undertake strategic investments. The initiative is also aimed at supporting regional industrial development, strengthening local supply chains and creating employment.
The SME Growth Fund will complement existing measures covering credit support, digitalisation, ease of doing business, public procurement, startup promotion and production-linked incentive programmes. The government said the initiative will also help deepen the domestic capital market for growth-stage enterprises and support innovation-led industrial development.