It was found that a raise of Rs.1,000 crore was implemented by the SIDBI Venture Capital Ltd. (SVCL) for funding the growing medium, small and micro enterprises (MSMEs) in India. It was the third fund provided by the financial institution and was called India Opportunities Fund (IOF).
Rs. 200 crore was initially given by the SIDBI (Small Industries Development Board of India) for setting up the fund. Banks and financial institutions are the main investors for the scheme. Life Insurance Corporation of India, IDBI, Syndicate Bank, State Bank of Baroda, and Punjab National Bank are also involved in the commitment.
The contribution of MSMEs in India to the industrial output and exports was found to be 45 percent and 40 percent respectively. An employment was given for about 42 million people by the sector. However, the major problem for the sector is the lack of funds. Financial institutions and banks are advised by the government for considering the MSME sector as a priority lending area. Several banks stopped the funding schemes that were provided for the sector during the economic downturn.
The main purpose of IOF is to meet growth risk capital needs of MSMEs. The IOF is meant to help sectors including educational services, clean tech, agro-based industries, light engineering, IT/ITES, logistics and infrastructure. An investment of Rs. 450 crore was given for the investment for SIDBI by the Tata group. Two other funds, the Rs. 100 crore National Venture Fund for Software and IT Industry (NFSIT) and the Rs. 500 crore SME Growth Fund (SGF) were managed by the SVCL.