Cabinet Approves ₹10,000-Crore SME Growth Fund to Boost Manufacturing

The Union Cabinet on Tuesday approved a proposal by the Ministry of Finance to commit ₹10,000 crore in central government funding for the establishment of a Small and Medium Enterprises (SME) Growth Fund, in line with an announcement made in Union Budget 2026. The decision is aimed at providing growth-oriented capital to eligible enterprises and supporting the expansion of India’s small and medium-sized businesses. The fund is expected to play a role in strengthening enterprises across sectors and encouraging the emergence of larger Indian businesses.

The SME Growth Fund was first mentioned in Union Budget 2026, when Finance Minister Nirmala Sitharaman had outlined the proposal as a measure to incentivise enterprises based on selected criteria. The Cabinet’s approval now provides for a ₹10,000-crore commitment from the Central government towards setting up the fund. The initiative is part of the government’s broader effort to support businesses with growth potential and strengthen the contribution of SMEs to the Indian economy.

According to a government release issued after the Cabinet meeting, the fund is aimed at catalysing growth-oriented capital for India’s SMEs. It is also intended to facilitate the emergence of “champion Indian enterprises” with the potential to expand across important areas of economic activity. The government has positioned the initiative as a mechanism to support enterprises that can contribute to the country’s industrial and economic development through expansion and greater competitiveness.

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The proposed fund will cover a broad range of sectors rather than being limited to traditional manufacturing enterprises. The government said the initiative would support businesses across manufacturing, services and technology, as well as innovation-driven sectors and strategic value chains. By directing growth-oriented capital towards enterprises operating in these areas, the fund is intended to help strengthen businesses that have the potential to scale and make a larger contribution to India’s economic activity.

The focus on manufacturing is particularly significant in the context of the government’s stated objective of encouraging the development of competitive Indian enterprises. SMEs operating across manufacturing and related value chains form an important part of the broader business ecosystem, while services and technology enterprises also contribute to innovation and economic growth. The government’s description of the fund indicates an effort to provide capital support across multiple areas where Indian enterprises have opportunities for expansion.

The Cabinet’s approval marks a key step towards establishing the ₹10,000-crore SME Growth Fund proposed in Budget 2026. The initiative is expected to provide growth-oriented capital to selected small and medium enterprises while supporting businesses across manufacturing, services, technology, innovation-driven sectors and strategic value chains. The government said the ultimate objective is to encourage the emergence of champion Indian enterprises capable of achieving greater scale and contributing to the country’s long-term economic development.

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