While many Indian states have shown limited progress in tapping into the government’s Self-Reliant India Fund (SRI Fund), Karnataka has emerged as the most proactive, securing investments for 151 MSMEs—the highest in the country.
The update was shared in the Lok Sabha by Minister of State for MSMEs, Shobha Karandlaje, who also noted that Maharashtra ranks second with 144 investee MSMEs. In contrast, most other states and Union Territories have yet to cross double-digit figures.
SRI Fund: A Backbone for Scalable MSMEs
Launched in 2020 under the Atmanirbhar Bharat package, the SRI Fund was designed to boost equity investments into growth-ready MSMEs. It operates on a Fund of Funds model, with Rs 10,000 crore from the central government and an additional Rs 40,000 crore expected from private equity and venture capital partners.
To date, 577 MSMEs across India have received equity support, with Rs 10,979 crore invested. The fund’s implementation is led by the NSIC Venture Capital Fund Limited (NVCFL), a wholly-owned subsidiary of National Small Industries Corporation (NSIC).
Backed by a Network of Daughter Funds
The SRI Fund invests in SEBI-registered Category I and II Alternative Investment Funds (AIFs), known as “daughter funds.” These include major financial institutions such as Tata Capital, IDBI Capital, SIDBI Venture, and ICICI Venture.
Each daughter fund is required to invest at least five times the capital received from the SRI Fund into MSMEs. This multiplier effect ensures significant downstream investment into India’s small and medium businesses.
As of February 2025, Rs 1,722 crore has been allocated and released by the central government to NVCFL, and Rs 1,641.90 crore has already been utilised, according to Karandlaje.
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Karnataka Sets the Benchmark
Karnataka’s leading performance highlights the impact of state-level facilitation and MSME readiness in accessing structured equity support. As other states look to improve their own utilization rates, Karnataka’s example could serve as a blueprint for expanding startup and MSME financing through public-private collaboration.
With the SRI Fund continuing to scale its investments and with 60 daughter funds currently empanelled, the focus now shifts to how effectively states can mobilize this capital for sustainable MSME growth and innovation.