Budget bets big on ‘Champion SMEs’ with Rs 10,000 crore fund, deeper credit push

Government Unveils Ambitious Plan to Transform MSMEs into "Champion SMEs"

Union finance minister Nirmala Sitharaman on Sunday announced a three-pronged plan to boost the growth of micro, small and medium enterprises (MSMEs) in India, marking a significant shift in the country's growth strategy.

Key Components of the Plan

• Equity Support: A ₹10,000 crore SME Growth Fund will be established to provide equity support to promising enterprises selected based on defined performance criteria.
• Easier Liquidity: The Trade Receivables Discounting System (TReDS) will be expanded to provide liquidity to MSMEs, with all purchases by central public sector enterprises from MSMEs now mandatorily settled through TReDS.
• Professional Handholding: Professional bodies will help train a network of "Corporate Mitras" to provide affordable, hands-on support to MSMEs in navigating regulatory requirements.

Details of the Plan

The ₹10,000 crore SME Growth Fund will be used to provide equity support to promising enterprises, while the Self-Reliant India Fund will be topped up by ₹2,000 crore to ensure continued access to risk capital for micro enterprises.

The expansion of TReDS will include:

• Invoice discounting on TReDS receiving credit guarantee support
• The GeM portal being linked to TReDS
• TReDS receivables being enabled as asset-backed securities to create a secondary market

The plan also includes the establishment of a network of "Corporate Mitras" in Tier-II and Tier-III towns to provide affordable, hands-on support to MSMEs in navigating regulatory requirements.

Impact of the Plan

The measures announced by the government mark one of the most comprehensive MSME-focused pushes in recent budgets, blending capital, credit and capability to boost the growth of MSMEs in India.