Cabinet clears ₹10,000 crore to back growing SMEs

Economy No. 46 6 October 2026 · 2 min read

The government will put ₹10,000 crore into a new SME Growth Fund, first announced in the Budget. The fund will buy stakes in small and medium-sized companies rather than lend them money. Most of the money is expected to go to manufacturers.

Why equity? The government says most existing funds focus on startups and micro firms. That leaves growing small and medium-sized companies with fewer ways to raise money without taking on more debt.

India tried something similar in 2021. The Self-Reliant India Fund got ₹10,000 crore from the government and was meant to bring in another ₹40,000 crore from private funds, creating a ₹50,000 crore pool. By November 2025, it had invested ₹15,442 crore across 682 firms, just 31% of the target. The Budget later added another ₹2,000 crore for micro firms.

The Cabinet also approved a new Integrated Transport & Logistics Authority (ITLA). Right now, roads, railways, ports and airports largely plan separately. ITLA will create one transport plan covering 10 years or more, review the technical design of central projects costing ₹500 crore or more, and track their progress.

There was also a Cabinet resolution marking the Prime Minister's 25 years as head of government.

The bigger picture is that the 2 funds are meant to serve different stages of a business. The older fund focuses on micro firms, while the new one is aimed at small and medium firms that are ready to scale.

Well, announcing ₹10,000 crore is not the same as investing ₹10,000 crore. The older fund took about 4 years to deploy less than 1/3 of its target.

Proportion bar of the Self-Reliant India Fund: ₹15,442 crore invested in 682 firms by November 2025, 30.9% of its ₹50,000 crore goal, with ₹34,558 crore, or 69.1%, not yet invested.

Waterfall of government money for the 2 funds that buy stakes in small firms: ₹10,000 crore for the Self-Reliant India Fund in 2021, ₹2,000 crore added in Budget 2026-27, and ₹10,000 crore for the SME Growth Fund cleared by the Union Cabinet on 6 October 2026, ₹22,000 crore in all.

Sources