Prime Minister Narendra Modi has welcomed the Cabinet’s approval of the ₹10,000 crore SME Growth Fund, describing the initiative as an important move to strengthen the MSME sector and nurture the next generation of Indian business leaders.
“The fund offers a platform for SMEs to scale up, adopt advanced technologies, expand manufacturing, enter global markets and integrate with global value chains,” PM Modi said in a post on X.
Big boost for the MSME sector!
This Cabinet decision is a major step towards creating the next generation of Indian business leaders.
It offers the platform for SMEs to scale up, adopt advanced technologies, expand manufacturing, enter global markets and integrate with global value chains.
https://t.co/vW0J07Iqak
— Narendra Modi (@narendramodi) October 6, 2026
Under the new framework, the Centre will commit ₹10,000 crore to an Alternative Investment Fund created through the SME Growth Fund initiative.
The fund will provide long-term growth equity to promising SMEs that demonstrate business viability and the potential to expand their operations.
The government will direct a substantial share of the funding towards small and medium manufacturing enterprises, while also supporting businesses operating in industrial clusters across Tier-II and Tier-III cities.
The initiative will help enterprises increase production capacity, modernise their technology and pursue strategic investments.
It will also enable Indian businesses to enter overseas markets and become part of global value chains, strengthening their ability to compete internationally.
The government expects the initiative to develop a pipeline of companies with greater scale, innovation and competitiveness across key sectors.
Bridging the Capital Gap
Small and medium enterprises play an important role in generating employment, supporting exports, driving manufacturing and promoting innovation.
However, businesses seeking rapid expansion often struggle to secure long-term risk capital for technological upgrades, capacity expansion, overseas growth and strategic acquisitions.
The SME Growth Fund seeks to address this financing gap by providing patient capital to high-potential enterprises.
The government also expects investments in industrial clusters to promote more balanced industrial growth across the country.
Funding for enterprises in Tier-II and Tier-III cities could strengthen local supply chains, improve productivity and create high-quality employment while enhancing India’s export competitiveness.
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