Cabinet Approves ₹10,000 Cr SME Growth Fund for MSMEs Under Budget 2026-27

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved a ₹10,000 crore SME Growth Fund to support micro, small and medium enterprises. The fund was announced under Budget 2026-27 and forms part of the government’s Creating Champion MSMEs strategy.

Why MSMEs Are Central to This Policy Push

MSMEs account for a large share of India’s economic activity across three dimensions:

• 35.4% of manufacturing output
• 48.58% of total exports
• 31.1% contribution to GDP

The sector also employs more than 32.82 crore people across over 7.47 crore enterprises, making it one of the country’s largest sources of employment.

What the SME Growth Fund Is Designed to Do

The SME Growth Fund sits under the equity-support pillar of the government’s three-pronged Creating Champion MSMEs strategy. Finance Minister Nirmala Sitharaman introduced the fund to create future champion enterprises and incentivise firms based on select criteria.

The broader MSME Champions Scheme aims to identify and nurture select enterprises by upgrading processes, reducing inefficiencies, improving competitiveness, and supporting expansion in domestic and international markets.

Alongside the new fund, the Cabinet also approved a ₹2,000 crore top-up to the Self-Reliant India Fund, set up in 2021 to support micro enterprises and maintain their access to risk capital.

How the Budget Addresses Liquidity Through TReDS

Beyond equity support, the Budget proposals included four liquidity measures centred on the Trade Receivables e-Discounting System, a platform that helps businesses discount invoices and receive payments earlier:

• Mandating TReDS as the transaction settlement platform for all purchases from MSMEs by central public sector enterprises.
• Providing credit guarantee support through the Credit Guarantee Fund Trust for Micro and Small Enterprises for invoice discounting on the platform.
• Linking the Government e-Marketplace with TReDS to share information with financiers about government purchases from MSMEs.
• Introducing TReDS receivables as asset-backed securities to develop a secondary market and improve transaction liquidity.

Budget Allocation for the MSME Ministry

Budget 2026-27 allocated ₹24,566.27 crore to the Ministry of Micro, Small and Medium Enterprises, with revenue expenditure accounting for the bulk of the outlay.

Final Outlook