Under the initiative, the Government of India will provide an aggregate commitment of Rs.10,000 crore to the Alternative Investment Fund (AIF) established under the SGF framework, an official release said.
The announcement for the scheme was made in the Union Budget 2026-27. This was in part of the holistic set of announcements that were made in Union Budget 2026-27 focussing on providing equity, liquidity and professional support for the MSME ecosystem as a whole.
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. 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, the release said.
There are existing funds which provide equity support but majority of them focus on early-stage enterprises and cover majorly Micro enterprises. A structural gap exists for equity growth capital for Small and Medium Enterprises, the government said.
SMEs constitute the backbone of the Indian economy, contributing significantly to employment generation, exports, manufacturing output, and innovation. While various initiatives have enhanced access to credit for SMEs, a gap remains in the availability of long-term risk capital required by enterprises seeking to scale, innovate, expand internationally, adopt advanced technologies, undertake acquisitions, and transform into industry leaders. The SME Growth Fund is designed to address this critical financing gap by providing patient growth, it said.
Majority allocation from SGF will be made towards small and medium manufacturing focused enterprises. Fund will also consider SME’s operating in industrial clusters in Tier II and Tier III cities, the release said.
By providing long-term capital, the initiative will enable Indian SMEs to scale operations, invest in technology and manufacturing capacity, expand into international markets, integrate into global value chains, and undertake strategic investments, it said.
The Government expects the Fund to accelerate the emergence of a strong pipeline of Indian companies with the scale, innovation capability, and competitiveness required to become champions in their respective sectors.
