Centre approves Rs 10,000 crore fund for equity capital of SME as FTAs open expansion opportunities
New Delhi, October 6
The Union Cabinet on Tuesday approved a government commitment of Rs 10,000 crore towards the establishment of the SME Growth Fund, aimed at providing direct equity investments to growth-oriented small and medium enterprises and helping create a new generation of Indian companies capable of competing globally.
The fund is expected to address a structural gap in long-term growth capital available to SMEs, particularly enterprises seeking to scale operations, adopt advanced technologies, expand internationally and integrate into global value chains, according to a release.
Briefing the media, Union Minister for Information and Broadcasting, Ashwini Vaishnaw said the new fund for SME's was established keeping in mind the plethora of opportunities expected to be unlocked due to the recent Free Trade Agreements with countries such as New Zealand, Australia, UAE, UK and more.
"The growth fund is aimed at long term funding for SME's....more than half of the fund will go to manufacturing-focused MSMEs," said Vishnaw.
The SME Growth Fund is aimed at providing "patient growth equity capital" to high-potential SMEs with demonstrated business viability and scalability. A majority of the fund's allocation will be directed towards small and medium manufacturing-focused enterprises, while SMEs operating in industrial clusters in Tier-II and Tier-III cities will also be considered.
Under the initiative, the government will provide an aggregate commitment of Rs 10,000 crore to the Alternative Investment Fund established under the SME Growth Fund framework.
The fund is expected to support SMEs at critical stages of expansion by enabling them to increase manufacturing capacity, invest in technology, undertake strategic investments and access international markets. The government expects the initiative to accelerate the creation of a pipeline of Indian companies with greater scale, innovation capabilities and competitiveness.
The move comes as the government seeks to strengthen the SME ecosystem beyond traditional credit support. According to the release, while various initiatives have improved access to credit for SMEs, a gap remains in the availability of long-term risk capital required for scaling, innovation, acquisitions and transformation into industry leaders.
The fund will also focus on industrial clusters in Tier-II and Tier-III cities, with the government expecting investments in these regions to support balanced industrial development, strengthen local supply chains and generate quality employment.
The initiative is also expected to improve productivity and export competitiveness of manufacturing enterprises as they gain access to capital for capacity expansion and advanced technology adoption.
The SME Growth Fund will complement existing government measures covering digitalisation, credit support, ease of doing business, public procurement, startup promotion and production-linked incentive programmes.
The government said the initiative is intended to catalyse investment in high-growth SMEs, support innovation-led industrialisation and create quality employment as part of its broader Viksit Bharat 2047 vision.
— ANI
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