New Delhi, Feb. 1 -- Presenting the Union Budget 2026-27 on Sunday, finance Minister Nirmala Sitharaman announced a slew of measures aimed at boosting economic growth, supporting micro, small and medium enterprises (MSMEs), and strengthening India's startup and innovation ecosystem.

As part of the proposals, Sitharaman said the government will top up the Self-Reliant India (SRI) Fund with an additional Rs 2,000 crore ($218 million). "I also propose to top up the Self-Reliant India Fund, set up in 2021, with Rs 2,000 crore to continue support to micro enterprises and maintain their access to risk capital," she said.

The SRI Fund is a government-backed equity investment initiative focused on providing growth capital to MSMEs with the potential to scale into larger businesses and contribute to economic growth. Launched in 2020-21 under the Atmanirbhar Bharat programme, it was created to address the funding gap faced by the MSME sector.

The fund primarily offers equity or equity-like capital to help MSMEs grow faster, innovate, create jobs, and compete at both national and international levels.

The fund has a total corpus of Rs 50,000 crore, of which the government contributes Rs 10,000 crore, with the remaining Rs 40,000 crore expected from private equity and venture capital investors.

The SRI Fund operates through a mother-daughter fund structure. The mother fund is managed by NSIC Venture Capital Fund Ltd (NVCFL), a SEBI-registered alternative investment fund (AIF). It allocates capital to daughter funds (smaller SEBI-registered funds) which, in turn, invest directly in startups through equity or quasi-equity instruments.

So far, the SRI Fund has backed 69 funds, including venture capital vehicles managed by IvyCap Ventures, Antler, IAN, Orios, Fireside Ventures and Endiya Partners. It has also supported private equity vehicles from firms such as Tata Capital, Gaja Capital, Carpediem Capital, Sabre Partners, BanyanTree PE, Singularity, and Somerset Indus Capital Partners.

Sitharaman also announced the creation of a new Rs 10,000 crore SME Growth Fund to support "champion" small and medium enterprises with strong growth and scaling potential. "I propose to introduce a dedicated Rs 10,000 crore SME Growth Fund to create future champions, incentivizing enterprises based on select criteria," she said.

Published by HT Digital Content Services with permission from VC Circle.