The Union Cabinet has approved a Rs 10,000 crore government commitment towards the establishment of the SME Growth Fund (SGF), aimed at providing growth-stage equity capital to small and medium enterprises and supporting the emergence of globally competitive Indian companies.

The fund, announced as part of the Union Budget 2026-27, will provide direct equity investments through an Alternative Investment Fund (AIF) to growth-oriented SMEs across manufacturing, services, technology, innovation-led sectors and strategic value chains.

The initiative seeks to address the existing gap in long-term risk capital for small and medium enterprises, particularly those looking to scale operations, adopt advanced technologies, expand internationally, undertake acquisitions and integrate into global value chains.

A majority of the fund's allocation will be directed towards small and medium manufacturing enterprises, with a focus also on SMEs operating in industrial clusters across Tier-II and Tier-III cities.

The government said the initiative is expected to boost manufacturing capacity, productivity and export competitiveness while supporting regional industrial development, strengthening local supply chains and generating quality employment.

The Rs 10,000 crore commitment to the AIF will complement existing government measures aimed at strengthening the MSME ecosystem, including credit support, digitalisation, public procurement reforms, startup promotion and production-linked incentive programmes.

The government expects the SGF to help build a pipeline of high-growth Indian enterprises capable of becoming sectoral champions and competing in global markets, supporting the broader vision of Viksit Bharat @ 2047.