Budget 2026: Govt tops up Self Reliant India fund by Rs 2,000 crore to shore up MSME equity support

Budget 2026: Govt tops up Self Reliant India fund by Rs 2,000 crore to shore up MSME equity support

The government will infuse an additional Rs 2,000 crore into the Self Reliant India (SRI) fund to strengthen equity financing for micro and small enterprises, finance minister Nirmala Sitharaman said during a post-Budget press conference, signalling a renewed push to ensure MSMEs do not face capital constraints.

Sitharaman said the top-up forms part of a broader three-pronged strategy to “champion MSMEs” through equity support, liquidity support and professional support.

“Above all, we are also topping up the Self Reliant India fund with Rs 2,000 crore. So MSMEs should not feel any dearth of resources for equity or liquidity,” she said.

Launched in 2021, the SRI fund-of-funds was designed to provide growth capital to MSMEs by anchoring daughter funds that invest equity into smaller enterprises. The additional allocation is expected to help sustain risk capital flows to micro and small firms at a time when traditional lending remains cautious and many early-stage businesses struggle to access long-term capital.

The SRI fund top-up comes alongside the government’s announcement of a new Rs 10,000 crore SME Growth Fund aimed at creating “future champions” among MSMEs by incentivising enterprises based on select performance criteria. While the new fund is expected to focus on scaling high-potential firms, the SRI fund continues to play a more foundational role by widening equity access for smaller and emerging businesses.

In parallel, the government is also seeking to address liquidity constraints for MSMEs through reforms to the Trade Receivables Discounting System (TReDS). According to the government, more than Rs 7 lakh crore has already been made available to MSMEs through TReDS, but the platform has yet to realise its full potential.

To deepen its impact, the Budget proposes mandating TReDS as the settlement platform for all MSME purchases by central public sector enterprises, introducing credit guarantee support through CGTMSE for invoice discounting, linking the GeM portal with TReDS to improve information flow to financiers, and enabling securitisation of TReDS receivables to develop a secondary market.

Together, the SRI fund top-up and TReDS measures underline the government’s emphasis on combining equity backing with faster liquidity access, as it looks to reduce financing stress for MSMEs amid volatile global conditions and uneven domestic demand.