GoI to support decarbonisation of MSMEs – Unveils Rs.15,000 Cr ‘Green’ initiative, fiscal incentives, regulatory relief
19 April 2025: Indian government is set to introduce comprehensive measures to support the decarbonisation of micro, small and medium enterprises (MSMEs) through fiscal incentives and regulatory relief, according to senior government officials. The initiative aims to transform the MSME sector, which currently accounts for 3-4% of India’s total CO2 emissions and 10-15 percent of industrial emissions, as per a news item by Knowledge and News Network (KNN).
The proposed framework encompasses several key elements, including the establishment of emission reduction targets, promotion of green fuel adoption, and advancement of technological innovations. A significant focus will be placed on developing a skilled workforce capable of facilitating the sector’s transition to environmentally sustainable practices, aligning with India’s broader objective of achieving net-zero emissions by 2070.
The National Institution for Transforming India (NITI Aayog) has conducted extensive stakeholder consultations, with plans to finalise a detailed roadmap for MSME decarbonisation by mid-February. This initiative is particularly crucial given that MSMEs contribute over 30 percent to India’s GDP and account for more than 45 percent of the country’s total exports.
“The major chunk of carbon emissions stem from pumps, motors, boilers and energy production from fossil fuels,” said Anil Bhardwaj, secretary general of Federation of Indian Micro and Small & Medium Enterprises (FISME). He emphasises that mitigation strategies should focus on energy efficiency improvements, alternative fuel adoption, grid modernisation, circular economy implementation, and the integration of emerging technologies.
The Ministry of MSME is developing a green scheme that will incorporate various environmental initiatives, including the creation of an e-marketplace for recyclables and the establishment of material recovery facilities. The green scheme outlay could be around Rs.15,000 crore and the scheme envisages the Bureau of Energy Efficiency (BEE) measuring emission levels from these enterprises and creating a reference point for emission levels for comparison, according to The Economic Times.
This comprehensive approach reflects the government’s recognition of the MSME sector’s energy-intensive nature and its commitment to reducing the sector’s carbon footprint while decreasing its dependence on fossil fuels. The initiative represents a significant step toward achieving India’s environmental goals while maintaining the sector’s crucial role in the nation’s economic growth.
