Why in news
- Union Cabinet approved a central commitment of Rs 10,000 crore to establish the SME Growth Fund.
Key terms
Risk Capital
Funds invested in high-growth enterprises carrying high exposure to capital loss in exchange for equity.
SME
Small and Medium Enterprises classified by investment in plant and machinery and annual turnover criteria.
Equity Investment
Capital infused into a company in exchange for ownership shares rather than debt repayment.
Viksit Bharat 2047
Government vision targeting India's transition into a developed economy by its centenary of independence.
What is the SME Growth Fund?
- A dedicated equity fund announced under Para 28 of Union Budget 2026-27 to support scaling Small and Medium Enterprises.
- Designed to address the structural deficit in long-term risk capital, as existing public funds predominantly target early-stage micro enterprises.
Key Features and Execution
- Provides direct equity investments to growth-stage SMEs in manufacturing, services, technology, and strategic value chains.
- Aims to catalyze domestic capital markets and scale high-growth Indian enterprises into global market leaders.
Why it matters
- Pivots MSME policy from credit availability and debt support towards equity-led balance sheet expansion.
- Strengthens risk-capital delivery for capital-intensive scaling in priority manufacturing and innovation sectors.
Prelims facts
- SME Growth Fund specifically targets growth-stage Small and Medium Enterprises rather than early-stage Micro units.
Mains discussion
- Measures required to bridge the missing middle in Indian manufacturing and scale MSMEs into global champions.
Source: PIB
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UPSC has asked this before
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