To promote energy efficiency and sustainability in Micro, Small, and Medium Enterprises (MSMEs), the Small Industries Development Bank of India (SIDBI), delves into the various initiatives and schemes, to enhance the competitiveness and environmental performance of MSMEs through targeted support and financial assistance. This article, details four key schemes: the End-to-End Energy Efficiency (4E) scheme, the Green Finance Scheme, initiatives promoting clean energy adoption, and the EV Scheme for Direct Lending. Each scheme is designed to address specific challenges faced by MSMEs, providing technical solutions, concessional financing, and capacity-building measures to foster a green and sustainable industrial ecosystem in India.
Mahratta Chamber of Commerce, Industries and Agriculture (MMCIA) jointly with Small Industries Development Bank of India (SIDBI), organized a conference with Senior Officials of SIDBI about Green Investment and Finance Schemes of Ministry of Micro, Small and Medium Enterprises, Government of India on 5th July at MCCIA Trade Tower.
The conference was organized with the aim to sensitize the MSMEs from Pune region about the various Schemes announced by Ministry of Micro, Small and Medium Enterprises-Government of India and SIDBI. The conference also aimed to encourage adoption of Green Technologies and Circularity in business operations.
Dr R K Singh, Chief General Manager-Green Climate Finance Vertical, SIDBI and Anjani Kumar Srivastava, GM & Regional In-charge, Pune Region, SIDBI, gave some indepth and extensive insights on the schemes that would help MSME’s and startups of the region.
Some imp schemes / initiatives of SIDBI for green initiatives
– End to End Energy Efficiency
– Green Finance Scheme
– Promoting Adoption of Clean Energy (PACE) – EV Scheme for Direct Lending
Under SIDBI’s mission of greening the enterprise ecosystem, the goal is to ensure that the entire MSME sector aligns with global environmental and social standards, thereby enhancing its global reputation. Dr Singh’s vision is for MSMEs to be recognized and appreciated worldwide for their commitment to sustainability.
SIDBI, through its energy audits—referred to as energy health check-ups—plays a parental role, guiding MSMEs toward sustainable practices. DrSingh likened this to a health check-up at a hospital, where identifying issues is the first step toward improvement. For instance, SIDBI successfully converted 100 enterprises from coal-fired to gas-fired furnaces. Despite initial resistance, this transition resulted in improved product quality and enhanced family life for the enterprise owners. Exporters are now more inclined to place orders with these environmentally conscious enterprises, even seeking direct engagement with SIDBI’s team for similar initiatives.
SIDBI’s role in achieving the Panchamrit Action plan goals
As part of India’s commitment to the Panchamrit action plan and achieving net zero emissions, SIDBI has implemented several initiatives focused on financing schemes, development projects, and risk mitigation models. DrSingh elaborated on how these measures support MSMEs in adopting innovative and sustainable practices.
One of SIDBI’s key strategies is to enable bankers to understand and finance new and innovative projects, such as solar panel rooftops or electric vehicles. This involves building the capacity of bankers to assess the bankability of these projects. In cases where MSMEs face challenges in securing financing, SIDBI provides backup guarantees to support them. DrSingh shared that when they started supporting electric vehicle initiatives in India, there was significant hesitation from bankers due to a lack of understanding of the projects’ viability. SIDBI’s risk mitigation model played a crucial role in overcoming these challenges and gaining support.
Thought leadership is another critical aspect of SIDBI’s approach, focusing on capacity building for both bankers and MSMEs. By studying international best practices and customizing them for India’s unique context, SIDBI aims to enhance the overall efficiency and sustainability of the MSME sector.
DrSingh noted that India has around 400 manufacturing clusters and approximately 5000 artisan clusters, with about 70% of these clusters being energy inefficient. Improving energy efficiency within these clusters is a priority for SIDBI, as it directly impacts the margins and sustainability of MSMEs. SIDBI is actively working on several clusters to implement these improvements and drive progress toward the Panchamrit action plan goals.
Dr Singh’s insights underscore SIDBI’s comprehensive approach to fostering a sustainable and globally aligned MSME sector, positioning India as a leader in green enterprise practices.
SIDBI’s Schemes for Achieving Energy Efficiency in MSMEs
Further, Santosh KR, AGM, Delhi, SIDBI, explained the schemes in detail.
End-to-End Energy Efficiency Scheme
SIDBI’s End-to-End Energy Efficiency (4E) scheme aims to support Micro, Small, and Medium Enterprises (MSMEs) in adopting energy efficiency measures. According to SIDBI, many Indian MSMEs are energy-intensive, using outdated technologies and operational methods that limit their competitiveness and future growth. This scheme is particularly beneficial for enterprises where energy costs constitute a significant portion of total production costs, as improving energy efficiency can substantially reduce these costs and enhance overall productivity.
Key Features of the Scheme:
Implementation Support: SIDBI provides assistance in identifying vendors for energy-efficient equipment and technologies, as well as during installation and commissioning. This support is facilitated through India SME Technology Services Ltd (ISTSL), a SIDBI partner organization.
Technical Solutions: The 4E scheme offers comprehensive technical solutions, including walk-through audits, detailed energy audits, bankable Detailed Project Reports (DPRs), implementation support, and advisory services.
Financial Assistance: MSMEs can avail financial support through a concessional lending approach under the 4E product.
Through these initiatives, SIDBI aims to help MSMEs improve energy efficiency, reduce energy losses, and ultimately enhance their competitiveness and sustainability.
Green Finance Scheme
The second scheme, the Green Finance Scheme, adopts a three-pronged approach:
Concessional Financial Assistance: Providing concessional financial assistance through dedicated Green Finance Schemes for mitigation and adaptation projects in the MSME sector.
Development Activities: Supporting various development activities to enhance awareness and create an ecosystem that facilitates the adoption of climate-resilient measures by MSMEs.
Encouraging Financial Institutions: Encouraging other banks and financial institutions to finance energy efficiency projects through training, handholding, and Risk Sharing Facility support.
This scheme aims to increase the resilience of the MSME sector to combat climate change and facilitate the greening of MSMEs in line with the country’s commitments made at the Conference of Parties (COP26) in Glasgow.
Additionally, the scheme supports the policy push made in the Union Budget 2022 for climate action, clean energy, solar, e-mobility, battery, waste management, and energy efficiency through Energy Service Companies (ESCOs).
Coverage:
The Green Finance Scheme covers sectors such as renewable energy, transport, waste management, energy, and mobility, emphasizing the adoption of Environment, Social, and Governance (ESG) parameters.
Through these schemes, SIDBI aims to foster a sustainable and climate-resilient MSME sector, aligning with global environmental goals and national policy initiatives.
Promoting Adoption of Clean Energy
MSE Scheme for Promotion and Investment in Circular Economy (MSE-SPICE): A Sub-Scheme under Raising and Accelerating MSME Performance (RAMP)
The global landscape is witnessing a paradigm shift towards sustainability, with increasing recognition of the imperative to adopt circular economy principles. Circular economy practices enable MSMEs to optimize resource usage by promoting recycling, reuse, and responsible consumption. This not only reduces the environmental footprint but also enhances operational efficiency and cost-effectiveness. In the overall global sustainability effort, encouraging circular practices in micro and small enterprises (MSEs) has become a strategic necessity.
The introduction of the MSE Scheme for Promotion and Investment in Circular Economy (MSE-SPICE) is a proactive step to harness the potential of MSEs in driving sustainable development. MSE-SPICE is a pioneering initiative by the Ministry of Micro, Small and Medium Enterprises (MoMSMEs) dedicated to empowering Micro, Small Enterprises (MSEs) to embrace sustainable practices through circular solutions. The primary goal of this scheme is to promote resource efficiency, reduce environmental impact, and enhance the competitiveness of MSEs in India.
MSE Green Investment and Financing for Transformation Scheme (MSE-GIFT): A Sub-Scheme under Raising and Accelerating MSME Performance (RAMP)
Promoting and adopting green technologies and clean energy sources in MSMEs is critical for making MSMEs in India sustainable. India has also committed to reducing emissions intensity by 45 percent by 2030, from the 2005 level to the United Nations Framework Convention on Climate Change (UNFCCC). India’s existing Nationally Determined Contributions (NDC) includes its long-term goal of reaching net zero by 2070.
In order to address these challenges faced by MSMEs and fulfill the commitments made with respect to sustainability, the Ministry of MSME has launched a sub-scheme named MSME Green Investment Financing for Transformation (MSE-GIFT) under the RAMP Programme. RAMP is a World Bank-supported Central Sector Scheme aimed at improving MSMEs’ access to credit, market, and technology.
The overall objective of the MSE-GIFT Scheme is to provide support to MSMEs in accessing institutional finance at a concessional rate for adopting clean/green technologies and help them transform into green and sustainable business operations.
Through these comprehensive schemes, SIDBI is committed to driving the adoption of sustainable practices, enhancing resource efficiency, and ensuring the resilience and competitiveness of MSMEs in India.
EV Scheme for Direct Lending
To enhance financing terms in the electric vehicle (EV) sector and strengthen the entire ecosystem, SIDBI has introduced the EV Scheme for Direct Lending. The pilot phase of ‘Mission 50K-EV4ECO’ focuses on bolstering the EV ecosystem, including the uptake of two, three, and four-wheelers through both direct and indirect lending.
Direct Lending: SIDBI will directly provide loans to eligible MSMEs, including aggregators, fleet operators, and EV leasing companies, for purchasing electric vehicles and developing charging infrastructure, including battery swapping.
Role of NBFCs: Non-Banking Financial Companies (NBFCs) play a crucial role in SIDBI’s enterprise growth strategy. They have demonstrated the ability to reach businesses at the grassroots level, especially in credit-deficient areas, by adopting innovative and flexible credit delivery models and understanding the local ecosystem.
Supporting India’s commitment to the EV30@30 initiative, SIDBI’s Mission 50K-EV4ECO scheme aims to provide affordable financing for EVs, facilitating broader adoption and contributing to the nation’s sustainability goals. Through these comprehensive schemes, SIDBI is committed to driving the adoption of sustainable practices, enhancing resource efficiency, and ensuring the resilience and competitiveness of MSMEs in India.
SIDBI’s comprehensive approach to fostering sustainability and energy efficiency in the MSME sector is pivotal for India’s broader environmental and economic goals. By introducing innovative schemes such as the End-to-End Energy Efficiency (4E) scheme, Green Finance Scheme, MSE-SPICE, MSE-GIFT, and the EV Scheme for Direct Lending, SIDBI is empowering MSMEs to adopt cleaner, more efficient technologies. These initiatives not only reduce the environmental footprint of MSMEs but also enhance their operational efficiency and competitiveness. As India strives towards its sustainability commitments, SIDBI’s role in supporting and transforming the MSME sector becomes increasingly crucial, paving the way for a greener and more resilient industrial landscape.
