Centre readies Rs 10,000 crore growth fund for small businesses
The Union Cabinet may consider the SME Growth Fund, announced in Budget 2026-27 to give equity support to firms that can grow big, on October 6, sources said.
The Centre is preparing a major step for the country's small and medium businesses. The Rs 10,000 crore SME Growth Fund is likely to get Cabinet approval. According to sources, the Union Cabinet may consider the proposal on October 6.
The fund is meant for small businesses and companies that have the potential to grow into big enterprises but cannot speed up because of a shortage of money. The government announced the fund in the Union Budget for 2026-27. Its aim is to give equity support to businesses that can expand and become large.
MSMEs are an important part of the country's economy. Lakhs of businesses operate in the sector, from small towns to large industrial areas. But capital is the biggest challenge for many small businesses. Expanding, buying new machinery, raising production or entering new markets all need money, and taking a bank loan is not an easy route for every entrepreneur. The government fund has been created to help such businesses grow.
The fund is not a scheme that will be distributed directly to every MSME. The government has designed it to promote promising enterprises on the basis of certain selected criteria. Companies with the potential to grow fast could be given equity support from the fund. The government's goal is to take forward businesses that can become large and strong Indian enterprises.
The SME Growth Fund is not a bank loan. The government has presented it as equity support for MSMEs, with the aim of providing growth capital to businesses that need money to expand. The process of obtaining money from the fund may therefore differ from that of an ordinary commercial loan.
The government is not offering only financial help. Budget 2026-27 has outlined a three-tier plan for the MSME sector: equity support, liquidity support and professional support. Besides the Rs 10,000 crore SME Growth Fund, an additional Rs 2,000 crore has been proposed for the Self-Reliant India Fund. This is intended to help keep risk capital available for micro enterprises. The government has also announced several measures linked to TReDS to resolve MSMEs' payment and working capital problems.
