Cabinet Approves Rs 10,000 Crore Fund to Bridge Growth‑Stage Capital Gap for SMEs

The Union Cabinet approved a Rs 10,000 crore Small and Medium Enterprise (SME) Growth Fund on Tuesday to provide equity support to growth‑stage firms. The fund, first announced in the 2026‑27 Union Budget, will be channeled through an Alternative Investment Fund under the SGF framework. It aims to close a structural gap where most existing equity schemes target early‑stage or micro enterprises, leaving medium‑size manufacturers without long‑term risk capital. The government said the fund will target high‑potential SMEs that have proven business viability and the ability to scale, especially those in manufacturing and industrial clusters of Tier‑II and Tier‑III cities. Investments are expected to boost regional industrial balance, strengthen local supply chains and create quality jobs. Vinod Kumar, president of the India SME Forum, called the Rs 10,000 crore fund a catalyst that could trigger a virtuous cycle of larger manufacturers placing bigger orders with smaller suppliers, leading to better machines, skill upgrades and more jobs. He added that such capabilities would help more MSMEs meet standards of domestic buyers and global supply chains, raising domestic value addition and export competitiveness. Former FISME president Sandeep Jain welcomed the use of an AIF, saying it would motivate SMEs to grow without worrying about financing and could yield strong dividends. Finance Minister Nirmala Sitharaman, who announced the fund in the budget, also proposed a Rs 2,000 crore top‑up to the Self‑Reliant India Fund to keep micro‑enterprises connected to risk capital. ## Context The fund reflects a broader shift in government policy toward patient equity financing for midsize firms, a segment that has struggled to attract private capital despite its role in job creation and exports.