The Union Cabinet cleared a Budget 2026-27 announcement to provide patient growth equity to high-potential small and medium enterprises, with a focus on manufacturing.

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• The Union Cabinet, chaired by Prime Minister Narendra Modi, approved a Rs 10,000 crore government commitment to the SME Growth Fund (SGF) on 6 October 2026.
• The fund will make direct equity investments in growth-oriented small and medium enterprises.
• The government will commit the money to an Alternative Investment Fund set up under the SGF framework, which will then invest in SMEs.
• The fund was announced in Union Budget 2026-27 as part of its strategy for creating champion MSMEs.
• Existing equity-support funds mostly cater to early-stage ventures and micro enterprises, leaving a structural gap in growth-stage capital for SMEs.
• The SGF will provide patient growth equity to SMEs that have shown business viability and the ability to scale.
• A majority of the allocation will go to small and medium manufacturing enterprises, and SMEs in Tier-II and Tier-III industrial clusters will also be considered.
• The capital can help firms expand capacity, adopt new technology, enter overseas markets, pursue acquisitions and join global value chains.
• Union Minister Ashwini Vaishnaw said the fund is designed to help SMEs tap opportunities from India's recent Free Trade Agreements.
• The Budget also proposed an additional Rs 2,000 crore for the Self-Reliant India Fund to give micro enterprises access to risk capital.
• Prime Minister Modi said the fund will help firms scale up, adopt advanced technologies and expand into global markets.