India’s MSMEs are central to the country’s economy, contributing significantly to employment, manufacturing, and exports, while also accounting for a major share of industrial energy use and emissions. As India works toward its climate goals, including Net Zero by 2070 and Viksit Bharat@2047, MSMEs are crucial to achieving a low-carbon transition. However, the sector faces major barriers such as limited financing, low awareness of government schemes, complex application processes, technological risk aversion, and insufficient technical support.
The report reviews the policy and institutional ecosystem supporting MSME decarbonisation, including national initiatives like MSME-RAMP, CLCSS, ZED Certification, BEE energy efficiency programs, SIDBI financing, and emerging green finance and carbon market mechanisms. While many schemes and incentives exist, their adoption remains uneven due to implementation challenges and limited accessibility. Programs that offer clear cost savings, easier credit access, shorter payback periods, and cluster-based support tend to achieve better uptake.
A comparison of state policies in Rajasthan, Haryana, and Uttar Pradesh shows that states with stronger institutional coordination, dedicated MSME support systems, and integration of energy efficiency into industrial policies achieve better outcomes in technology adoption. The report stresses the importance of aligning policies, budgets, and institutions to accelerate MSME decarbonisation.
Key recommendations include simplifying scheme processes, improving both online and offline access, strengthening technical assistance, conducting structured energy audits, enhancing data systems, and increasing stakeholder feedback mechanisms. The report concludes that with targeted financial support, accessible credit, institutional handholding, and coordinated implementation, MSMEs can become a driving force in India’s sustainable industrial transition and contribute significantly to the country’s economic and climate goals.
