The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved Rs 10,000 crore for the establishment of SME Growth Fund (SGF) for direct equity investments in Small and Medium Enterprises (SMEs). The SGF is aimed at creating champion Indian enterprises across manufacturing, services, technology, innovation-driven sectors, and strategic value chains. The Information and Broadcasting Minister Ashwini Vaishnaw has said that SGF will be operated in collaboration with the MSME Ministry and the Finance Ministry. Pointing out the existing structural gap for equity growth capital for Small and Medium Enterprises, the minister said that there are existing funds, which provide equity support, but the majority of them focus on early-stage enterprises and cover mainly micro enterprises.
He noted that the government will provide an aggregate commitment of Rs 10,000 crore to the Alternative Investment Fund (AIF) established under the SGF framework under the initiative. By enabling manufacturing enterprises to expand capacity, adopt advanced technologies and achieve greater scale, the SGF is expected to improve scale, productivity, and strengthen export competitiveness. He added that the majority of the funds will go towards SMEs in the manufacturing segment. Investments across industrial clusters, including those in Tier-II and Tier-III cities, will support balanced regional industrial development, reinforce local supply chains and generate high-quality employment opportunities.
Highlighting importance of MSME sector, he said that MSMEs are very important for employment generation, exports, and manufacturing. He also said that the definition of MSMEs has also been changed, and steps have been taken to ensure that they can access loans more easily. He added that SGF is envisioned as a transformational instrument to support enterprises at critical inflection points in their growth journey and will serve as a key pillar in advancing the vision of Viksit Bharat at 2047.
