Financial Incentives And Awareness Key To Boosting Energy Transition In MSMEs: WRI India Study

According to a new working paper published by WRI India titled 'Analysing the Policy Landscape for Supporting the Clean Energy Transition in Small and Medium Enterprises in India,' financial incentives and increased awareness are critical to accelerating clean energy adoption among India's Micro, Small, and Medium Enterprises (MSMEs). The study, released ahead of Micro, Small, and Medium Enterprises (MSME) Day, evaluates policies and schemes implemented between 2010 and 2020 to help drive this transition. 

The MSME sector, which accounts for nearly 30 percent of India's GDP, is a major energy consumer. These businesses have high energy consumption requirements and account for approximately 25 percent of total energy consumption in the industrial sector. The report emphasises that, while a few schemes provide financial incentives for clean energy adoption, the focus on pandemic recovery and the possibility of subsidy reductions have slowed progress. 

The report's key findings are as follows: 

• Existing clean energy schemes offer limited financial incentives to MSMEs.
• Pandemic recovery efforts and potential subsidy reductions have slowed clean energy adoption.
• The integration of central and state-level schemes increases adoption rates.
• A comprehensive framework for assessing the impact of clean energy transition policies is essential. 

The study also emphasises the importance of policy consistency, government support, awareness campaigns, and a favourable regulatory environment for MSMEs to effectively decarbonise. 

"MSMEs require policy consistency, government support, awareness of the benefits of clean energy, and a supportive regulatory environment to decarbonise and survive the challenges of energy transition and a climate-stressed world," said Gowthami T.S., lead author and Senior Project Associate, Energy, WRI India. 

The launch event included a panel discussion with policymakers, civil society representatives, and research organisations, emphasising the importance of policy interventions and public-private financial collaboration in facilitating the transition to clean energy in the MSME sector.