India, Oct. 6 -- The Government of India has issued a release:
Classification of SMEs
India's MSME Ecosystem
Contribution to the Economy: According to the Economic Survey 2025-26, MSMEs account for 31.1% of GDP, 35.4% of manufacturing output and 48.58% of exports.
Expanding Formal MSME Base: As of 6 October 2026, total MSME registrations under Udyam and the Udyam Assist Platform (UAP) reached ~9.78 crore. Registered MSMEs have also reported ~43.28 crore employment opportunities.
Women's Participation in MSMEs: Female-owned enterprises account for 37.6% of total registrations.
MSMEs Across Key Economic Activities: The registered base is spread across trading, services and manufacturing. Trading accounts for around ~4.08 crore registrations, followed by services at ~3.77 crore and manufacturing at ~1.93 crore.
What are AIFs?
Investment Structure and Selection
Strategic Focus of the SME Growth Fund
How Long-Term Growth Capital Enables SME Expansion
Scale operations
Undertake acquisitions
Foster innovation
Integrate into global value chains
Adopt advanced technology
Undertake strategic investments
Invest in manufacturing capacity
Expand into international markets
Focus Area
Key Implementing Schemes
Credit and Finance Support
Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
Employment generation
Prime Minister's Employment Generation Programme (PMEGP)
End-to-end support
PM Vishwakarma
Training and Entrepreneurship Development
MSME Skilling, Entrepreneurship and Skill Development Programme (ESDP), ASPIRE
Technology Infrastructure and Enablement
Raising and Accelerating MSME Performance (RAMP), Zero Defect (ZED) Scheme, Tool Room and Tech Centre
Public Procurement
MSME SAMBANDH, SC/ ST Hub
Enterprises are classified as micro, small or medium based on investment in plant and machinery or equipment, and annual turnover. Under the latest criteria (effective from April 2025), a small enterprise has investment of up to Rs.25 crore and turnover of up to Rs.100 crore. A medium enterprise has investment of up to Rs.125 crore and turnover of up to Rs.500 crore.
An Alternative Investment Fund (AIF) is a privately pooled fund established in India that raises money from investors and invests it according to a defined policy.
A New Growth Capital Push for SMEs
Small and Medium Enterprises (SMEs) form the backbone of the Indian economy, contributing to employment, exports, manufacturing output and innovation. To support their growth, the Union Cabinet has approved a commitment of Rs.10,000 crore towards establishing the SME Growth Fund (SGF).
The Fund will provide patient equity capital to high-potential SMEs with demonstrated business viability and scalability. It aims to support the emergence of champion enterprises across manufacturing, services, technology, innovation-driven sectors and strategic value chains.
As part of the holistic set of announcements made under the Union Budget 2026-27, the initiative focuses on providing equity, liquidity and professional support to the MSME ecosystem.
Operational Framework of the SME Growth Fund
The SME Growth Fund is designed as a direct equity investment fund and will operate in the form of Alternative Investment Fund (AIF) established under the SGF framework.
The Fund is intended to support firms seeking to expand manufacturing capacity, adopt advanced technologies, improve productivity and strengthen export competitiveness.
This is expected to support balanced regional industrial development, strengthen local supply chains and generate quality employment opportunities.
Why SMEs Need a Dedicated Growth Fund?
Despite the wide presence of MSMEs across the economy, existing equity funds largely focus on early-stage enterprises covering Micro enterprises. This creates scope to further expand access to growth equity capital for Small and Medium Enterprises.
Such capital becomes important as SMEs seek to scale further. It can also help enterprises navigate critical inflection points in their growth journey and move towards greater scale and competitiveness. These investments can support promising SMEs in developing into industry leaders.
Impact on Innovation, Growth and Employment
The Fund is expected to strengthen the growth of high-potential SMEs across key sectors. Its impact aims to extend to enterprise scale-up, competitiveness and employment generation.
A Broader Support Ecosystem for MSMEs
MSMEs receive support across several areas, including finance, employment generation, skills, technology, end-to-end assistance and public procurement.
Conclusion
The SME Growth Fund complements ongoing efforts to strengthen the SME sector through reforms, digitalisation, credit support and ease of doing business measures. By catalysing investments, the Fund will promote innovation-led industrialisation while advancing the vision of Atmanirbhar Bharat and Viksit Bharat@2047.
This support for smaller enterprises reflects India's broader effort to make growth more inclusive, with opportunities extending across the country.
References
Cabinet:
https://www.pib.gov.in/PressReleasepage.aspx?PRID2319532®48&lang1
Ministry of Micro, Small & Medium Enterprises (MSME):
https://www.msme.gov.in/ministry/about-us/details/Title%3DWhat%27s-MSME-IzMzITMtQWa
https://dashboard.msme.gov.in/
Securities and Exchange Board of India:
https://www.sebi.gov.in/sebi_data/faqfiles/jan-2017/1485861425527.pdf
PIB Archives:
https://www.pib.gov.in/FactsheetDetails.aspx?ModuleId16&NoteId150826&id150826&lang2®48
Click here to see pdf
Disclaimer: Curated by HT Syndication.
