Local Actions, National Goals: Strengthening the Role of MSMEs in India's Industrial Decarbonisation

By-Abhishek Bhardwaj, Gowthami TS, Akansha Saklani

India’s micro, small and medium enterprises (MSMEs) are the unsung heroes of its industrial growth, contributing to nearly 30% of the country’s GDP, 45% of exports and sustaining over 250 million jobs. Yet, they largely remain absent from the country’s clean energy narrative. Overlooking MSMEs in India’s clean energy transition will mean risking its 2030 renewable energy target of 500 GW and 2070 net-zero goal. 

The recently announced Assistance in Deploying Energy Efficient Technologies in Industries & Establishments (ADEETIE) Scheme by the Ministry of Power is a promising step. By offering interest subvention, energy audits and detailed project reports, it aims to empower MSMEs in their clean energy journey. But this will only succeed if clean energy adoption becomes a business imperative, and not just a climate aspiration for the millions of enterprises across India.

Prone To Climate Risks 

MSMEs are disproportionately vulnerable to climate risks. Limited resources and low adaptive capacity threaten their operations, supply chains and long-term viability. Electricity alone can account for roughly 40% of monthly variable costs for many SMEs, making energy bills a business risk. Transitioning to clean energy is therefore not just about sustainability, but a survival imperative.

Currently, there are several national and state-level policies supporting green growth — from the BEE-SME program that assessed technology gaps and provided energy-efficient solutions to the MSME Champions Scheme and the MSE – Scheme for Promotion and Investment in Circular Economy (MSE – SPICE), which promotes cleaner production, circularity and concessional finance to MSMEs.  But policy intent must translate into scalable, data-informed action.

WRI-Piloted RTS Project

One such example comes from Haryana, where WRI India piloted a rooftop solar initiative (RTS) across SME clusters. The model included integrating rigorous capacity-building, technical handholding, and machine learning–based algorithms to assess solar potential. By aggregating demand across units, SMEs negotiated lower system prices — nearly 7% less —and secured better service agreements. In Yamunanagar, this model showed how collective procurement can scale RTS deployment. By the end of 2024, seven units had independently installed RTS systems with a combined capacity of 1.8 MW. 

State-level incentives like Haryana’s interest subsidy played a critical role, along with continuous dialogue between MSME owners, solar vendors, distribution companies and industry associations that helped build trust and bridge technical and operational concerns. The pilot described in the research demonstrated that cluster-level adoption, supported by policy incentives, innovative machine learning techniques, blended financing and capacity building, can accelerate RTS deployment nationwide.

Data Analytics & AI

Technology can further accelerate this momentum. Data analytics and AI can help reduce project costs and make MSME clusters more attractive to financiers. 

However, challenges persist. Affordable finance remains the biggest hurdle. SMEs tend to be risk-averse and lack collateral and the expertise to navigate lending processes — even with subsidies. Capacity-building and awareness programs are equally crucial to demystify clean energy and demonstrate its long-term gains.

India’s MSMEs will play a crucial part in India’s journey towards decarbonization. While central to the economy, MSMEs are left on the sidelines, making them even more vulnerable to climate shocks. Scalable solutions like RTS, supported by finance, capacity-building, and digital innovation, show that the transition is both possible and profitable. With the right policies and support, MSMEs can drive an equitable, resilient and competitive green economy.

Abhishek Bhardwaj, Gowthami TS and Akansha Saklani work with the Energy Program at WRI India. Views expressed by the authors are personal.