The Indian government decided on Tuesday to allocate Rs 10,000 crore to establish the SME Growth Fund (SGF). This fund is intended for direct equity investments in small and medium enterprises.
The decision was made at the meeting of the Union Cabinet, chaired by Prime Minister Narendra Modi. According to an official statement, the Cabinet approved the government's commitment of Rs 10,000 crore to create the SGF to stimulate growth-oriented capital for SMEs and to form leading Indian enterprises in the sectors of manufacturing, services, technology, innovation, and strategic value chains.
This fund was announced as part of the Union Budget. During a press briefing, the Minister of Information and Broadcasting, Ashwini Vaishnaw, stated that the SGF will operate in collaboration with the Ministry of MSMEs and the Ministry of Finance.
Despite the existence of existing funds providing shareholder support, most of them are focused on early-stage enterprises and primarily cover micro-enterprises. There is a structural gap in capital for growing equity specifically for small and medium enterprises.
Under this initiative, the government will channel a total commitment of Rs 10,000 crore to an Alternative Investment Fund (AIF) created within the SGF structure. The SGF is expected to improve the scale, productivity, and strengthen the export competitiveness of manufacturing enterprises, enabling them to expand capacity, adopt advanced technologies, and achieve greater scale.
Vaishnaw emphasized that a large portion of the funds will be directed towards SMEs in the manufacturing segment. Investments in industrial clusters, including those located in second and third-tier cities, will support balanced regional industrial development, strengthen local supply chains, and create high-quality jobs.
Thus, the government reaffirms its commitment to supporting Indian entrepreneurs and developing a new generation of competitive enterprises. It was noted that 'by stimulating investment in SMEs with high growth potential, the fund will help create leaders, promote innovation-driven industrialization, and generate quality employment opportunities across the country. This initiative will serve as a key pillar in realizing the Viksit Bharat vision by 2047.'
