Stories
Union Cabinet to Approve Rs 10000-Crore SME Growth Fund
- •The Union Cabinet is expected to approve a Rs 10,000-crore SME Growth Fund during its meeting on October 6.
- •Originally announced in the FY27 Budget by FM Nirmala Sitharaman, the fund aims to provide fresh incentives and equity support to small businesses and MSMEs.
- •The financial backing is designed to help enterprises facing credit stress and outdated technology to expand operations and make a comeback.
- •The Self-Reliant India Fund is also set to receive additional support, including a Rs 2,000-crore top-up.
- •The government plans to address liquidity concerns by making the Trade Receivables Discounting System mandatory for central public sector enterprises dealing with MSMEs.
Key Questions Answered
Announced by Finance Minister Nirmala Sitharaman in the FY27 Budget, the Rs 10,000-crore SME Growth Fund is designed to provide equity support to select enterprises based on pre-defined criteria. The fund aims to give a fresh impetus and lease of life to Micro, Small, and Medium Enterprises (MSMEs) that have weakened due to credit stress and outdated technology, helping them expand operations and overcome a tight credit pipeline.
To address liquidity concerns, the government plans to make the Trade Receivables Discounting System (TReDS) mandatory for all central public sector enterprises when they deal with MSMEs. Additional proposals include linking the Government e-Marketplace with TReDS, extending credit guarantee cover for invoice discounting, and allowing TReDS receivables to be issued as asset-backed securities.
The Budget speech mentioned a Rs 2,000-crore top-up for the Self-Reliant India Fund, alongside plans to further increase the overall allocation for the fund-of-funds structure during the year to continue equity participation in MSMEs.
