How to mobilise green finance for Indian micro, small and medium enterprises

How to mobilise green finance for Indian micro, small and medium enterprises

The article discusses how India’s 63 million MSMEs, which contribute 30% of GDP and consume 20-25% of industrial energy, struggle to access financing for decarbonization despite high energy costs (10-30% of production costs). It proposes a green finance platform governed by SIDBI to help MSMEs access green bond capital, leveraging SIDBI’s AAA credit rating and Green Climate Fund accreditation. The platform would follow SEBI’s disclosure requirements and Green Loan Principles, with SIDBI either directly disbursing green loans to MSMEs or lending through financial institutions. To address challenges, the article suggests creating a credit guarantee fund similar to CGTMSE to cover up to 85% of loan values, and establishing a technical assistance pool for capacity building. This would benefit both MSMEs seeking to decarbonize and SIDBI’s reputation among ESG investors.