The Cabinet approved a ₹10,000 crore SME Growth Fund on 6 October, with no published manager, term, private-capital share or eligibility test. The first startup fund of funds had disbursed ₹3,400 crore of its ₹10,000 crore by end-2022 while reporting ₹14,077 crore invested, and the SRI Fund reports its progress in more than one way.
The SME Growth Fund Is India’s Fourth ₹10,000 Crore Government Equity Programme. Their Scorecards Count Different Things
On 6 October the Cabinet approved a ₹10,000 crore SME Growth Fund. The government’s money goes into an alternative investment fund that will buy equity in growth-stage small and medium enterprises, with more than half meant for manufacturing and a mention of Tier-II and Tier-III industrial clusters. The Budget speech in February promised a fund “to create future champions”, with enterprises incentivised “based on select criteria”. The approval says who is eligible no more than the speech did.
The fund is the fourth government equity programme with a ₹10,000 crore government share in a decade: the first Fund of Funds for Startups (2016), the Self-Reliant India Fund for MSMEs (announced in 2020), the second Fund of Funds for startups (Cabinet in February 2026), and now this. Each reports its own progress in its own way, which makes the track record hard to read before putting a fourth fund beside it.
Four funds, four scorecards
| Programme | Government money | How it works | What it reports |
|---|---|---|---|
| Fund of Funds for Startups 1.0 (2016) | ₹10,000 crore over two Finance Commission cycles | SIDBI commits to SEBI-registered funds (AIFs), which invest in startups | Commitments, disbursements and total AIF investment in startups, in parliamentary replies; an independent CRISIL assessment |
| Self-Reliant India Fund (announced 2020; guidelines August 2021) | ₹10,000 crore, with ₹40,000 crore meant to come from private funds; a Budget 2026-27 top-up of ₹2,000 crore (one report says ₹4,000 crore) | NSIC Venture Capital Fund puts money into “daughter” funds, which invest in MSMEs | Cumulative investment in MSMEs, counted in more than one way |
| Startup India Fund of Funds 2.0 (Cabinet February 2026; notified 13 April 2026) | ₹10,000 crore | SIDBI selects AIFs in four segments, including “innovation-led manufacturing”; government share capped at 50% of an AIF | Too new to have a record |
| SME Growth Fund (Budget February 2026; Cabinet 6 October 2026) | ₹10,000 crore | Government commits to an AIF set up under the fund’s framework; direct equity in growth-stage SMEs, as reported | Nothing yet |
Sources: PIB 2221434 (Budget announcement), 2227988 and 2251638 and 2255545 (Fund of Funds 2.0); press coverage of the Cabinet decision of 6 October (Business Standard, Deccan Chronicle, UNI, PTI and others); parliamentary replies and SRI Fund guidelines as reported. The Budget top-up to the SRI Fund is given as ₹2,000 crore in one summary and ₹4,000 crore in another.
What the first fund shows about counting
The first fund of funds is the best-documented case, and it shows how one programme can carry several honest-looking numbers. At the end of 2022 the commerce ministry told Parliament that funds supported by the scheme had invested ₹14,077 crore in 791 startups. Behind that figure, the same reply said ₹7,980 crore was committed to 99 funds and only ₹3,400 crore had been disbursed to 72 of them. The ₹14,077 crore is everything the funds invested, including private money raised alongside; it is not what the government put in. The scheme requires funds to invest a multiple of the government commitment in startups (reported as at least twice), so a larger number is expected. A CRISIL assessment later put the total at ₹17,534 crore in 938 startups by November 2023.
Neither number is wrong. But a reader asking “how much of the ₹10,000 crore has reached firms?” gets a different answer from each, and the smallest, the government’s own disbursement, is the one that answers it. An early-2026 report in The Ken, citing a SIDBI spokesperson, put the amount handed to SIDBI at about ₹6,800 crore of the ₹10,000 crore. That is a single report from a spokesperson, not a parliamentary reply, and it was not checked; it is cited because it is the latest figure found.
The same question for the MSME fund
| Date | Self-Reliant India Fund, as reported |
|---|---|
| March 2025 | About ₹10,979 crore invested in 577 MSMEs |
| November 2025 | ₹15,442 crore in 682 MSMEs (a PIB document) |
| January 2026 | About ₹14,781 crore from the fund structure into investee entities, plus about ₹1,962 crore from daughter funds directly into MSMEs: about ₹16,743 crore in total (an ICAI journal article) |
The three figures may measure different things, and no source found gave the amount sanctioned or the share of the ₹10,000 crore government money actually drawn down.
The Self-Reliant India Fund, which backs MSMEs through daughter funds, is the closer comparison for the new fund. The three published figures above go from about ₹11,000 crore to about ₹16,700 crore of investment in MSMEs in ten months, but they are not obviously the same measure, and the fund’s own target of ₹50,000 crore (₹10,000 crore of government money and ₹40,000 crore from private funds) has no published progress against it. Whether the SRI Fund’s daughter funds have reached the medium-sized firms the new fund is meant for is not something the numbers answer.
What is known about the new fund
| Question | What was found |
|---|---|
| How much does the government put in? | ₹10,000 crore, committed to an AIF under the fund’s framework |
| What does it buy? | Equity in growth-stage small and medium enterprises, as reported; more than half for manufacturing, with Tier-II and Tier-III clusters named; services, technology and “strategic value chains” also in scope |
| Who runs it? | The MSME and Finance ministries, according to Union minister Ashwini Vaishnaw’s briefing. No fund manager was named in anything found |
| How much private money must come with it? | Not found |
| How long does the fund last? | Not found |
| Which firms qualify? | The Budget speech said “select criteria”. Secondary pieces list manufacturing history, scalability, governance, technology adoption and exports; none is an official text. “SME” is not defined in anything found; under the April 2025 classification a medium enterprise has investment up to ₹125 crore and turnover up to ₹500 crore |
| How does it differ from the older funds? | Not stated in anything found. Both the SRI Fund and Fund of Funds 2.0 already include manufacturing-focused routes |
The Cabinet decision was seen in press coverage only; the PIB release of 6 October is after the end of this blog’s PIB index, and PIB pages could not be opened.
The gap that matters is eligibility. The Budget speech and the Cabinet coverage describe a fund for enterprises that are already growing; the old funds were designed for startups and for MSMEs. Where the line falls decides whether the money goes to firms with ₹100 crore of turnover or ₹500 crore, and so how far it overlaps with banks and with the existing funds. The second startup fund already has an innovation-led manufacturing segment. How the new fund avoids competing with it for the same deals is not stated.
A second gap is the government’s share of the money. In the second startup fund the government can be at most half of any fund’s corpus. For the new fund the share of private money is not stated, and with it the incentives of whoever manages the fund.
What would fix this
- The Department of Financial Services and the Ministry of MSME should publish the fund’s terms before its first close: the investment manager and how it is chosen, the fund’s life, the private-capital share required, the fees, and a written eligibility test tied to the Udyam size classes.
- SIDBI and NSIC Venture Capital Fund should report each quarter, for every government equity programme, four numbers on one page: amount committed to funds, amount drawn down by funds, amount invested in firms, and how much of each is government money, so “invested” can no longer mean three different things.
- The Ministry of MSME should commission and publish an independent evaluation of the Self-Reliant India Fund before the new fund’s first investment, as the Department for Promotion of Industry and Internal Trade did for the first startup fund of funds with CRISIL.
- The Department for Promotion of Industry and Internal Trade and the Ministry of MSME should keep one public register of every fund and manager supported across the four programmes, so overlap between funds and managers can be seen.
- The Ministry of Finance should state in the fund’s framework how the SME Growth Fund differs from the SRI Fund and the innovation-led manufacturing segment of Fund of Funds 2.0, with the size of firm each is meant to serve.
These are proposals from this blog, not recommendations any agency has adopted.
Sources and caveats
Budget announcement (1 February 2026, PIB 2221434); Startup India Fund of Funds 2.0 (Cabinet 14 February 2026, PIB 2227988; notification 13 April 2026, PIB 2251638; operational guidelines 25 April 2026, PIB 2255545), titles and dates from this blog’s PIB index. The Cabinet decision of 6 October 2026 is not in the index, which ends on 1 October; it is described from press coverage (Business Standard, Deccan Chronicle, UNI, PTI via Nagaland Post, Channel IAM, SMEStreet, and others), and the Cabinet note and press release were not seen. PIB pages could not be opened from this blog’s tools. Fund of Funds 1.0 figures (₹7,385 crore to 88 funds and ₹11,206 crore in 720 startups at 24 September 2022; ₹7,980 crore to 99 funds, ₹3,400 crore disbursed to 72, ₹14,077 crore in 791 startups at 31 December 2022) are from commerce ministry replies as reported by trade press, and the CRISIL figure (₹17,534 crore in 938 startups to November 2023) from press coverage of the assessment; the original replies were not read. The Ken’s figure comes from a SIDBI spokesperson and is unchecked. Self-Reliant India Fund figures are from a PIB document, an ICAI journal article and guidelines as reported; they may measure different things. The terms of Fund of Funds 2.0 are from law-firm and trade summaries of the DPIIT guidelines. Eligibility lists for the new fund are from broker and trade commentary, not an official text. SIDBI’s venture arm also ran an older fund called the SME Growth Fund; it is a different, much smaller product. This article takes no position on whether the fund should exist.
About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.
