Cabinet approves ₹10,000 crore Government commitment to SME Growth Fund for direct equity investment in small and medium enterprises

What the Cabinet approved

The Union Cabinet, chaired by the Prime Minister, on 6 October 2026 approved the Government of India’s commitment of ₹10,000 crore towards the establishment of the SME Growth Fund (SGF). The release describes the Fund as meant for direct equity investments in Small and Medium Enterprises (SMEs), and says the decision is as per Para 28 of the Union Budget 2026-27. It was part of a set of Budget announcements on equity, liquidity and professional support for the MSME ecosystem.

Under the initiative, the Government will provide an aggregate commitment of ₹10,000 crore to the Alternative Investment Fund (AIF) established under the SGF framework.

The gap the Fund is meant to fill

According to the release, existing funds that provide equity support mostly focus on early-stage enterprises and cover mainly Micro enterprises. It says a structural gap exists in equity growth capital for Small and Medium Enterprises.

The release adds that while various initiatives have improved access to credit for SMEs, a gap remains in long-term risk capital for enterprises that want to scale, innovate, expand internationally, adopt advanced technologies, undertake acquisitions and become industry leaders. The Fund is designed to provide “patient growth equity capital” to high-potential SMEs with demonstrated business viability and scalability.

Where the money is to go

What the Government expects

• SMEs able to scale operations, invest in technology and manufacturing capacity, expand into international markets and integrate into global value chains.
• Better scale and productivity, and stronger export competitiveness, for manufacturing enterprises.
• Balanced regional industrial development, stronger local supply chains and employment through investments in industrial clusters, including those in Tier II and Tier III cities.

The release says the commitment complements the Government’s other measures for the sector, including credit support mechanisms, ease of doing business measures, public procurement reforms, startup promotion initiatives and production-linked incentive programmes.

What the release does not say

The release announces the approval and the amount. It does not set out:

• the eligibility criteria for an enterprise, or any turnover or investment limits;
• the size of investment per enterprise;
• who will manage the Fund, or how an enterprise is to apply;
• the period over which the ₹10,000 crore will be committed, or the date from which the Fund will begin investing.

What this means for SMEs

This is equity, not a loan or subsidy scheme: the Fund is described as investing growth capital in enterprises. Small and medium enterprises, particularly in manufacturing and in Tier II and Tier III industrial clusters, are the stated focus. Until the operating details are published, there is nothing to apply for on the basis of this release.