Centre bets Rs 10K cr on next generation of SME champions

The government on Tuesday committed Rs 10,000 crore to establish an SME Growth Fund (SGF) for direct equity investments in Small and Medium Enterprises. The decision was taken at the Union Cabinet meeting chaired by Prime Minister Narendra Modi. The Cabinet approved the government commitment of Rs 10,000 crore to establish SGF to catalyse growth-oriented capital for SMEs and create champion Indian enterprises across manufacturing, services, technology, innovation-driven sectors, and strategic value chains, a release said.

The fund was announced in the Union Budget. Briefing media on the decision, Information and Broadcasting Minister Ashwini Vaishnaw said SGF will be operated in collaboration with the MSME Ministry and the Finance Ministry. There are existing funds, which provide equity support, but the majority of them focus on early-stage enterprises and cover mainly micro enterprises. A structural gap exists for equity growth capital for Small and Medium Enterprises.

Under the initiative, the government will provide an aggregate commitment of Rs 10,000 crore to the Alternative Investment Fund (AIF) established under the SGF framework. 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.

Vaishnaw said the majority of the funds will go towards SMEs in the manufacturing segment. 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.

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The Hans India