Small Industries Development Bank of India (Sidbi) will sign an agreement with the Green Climate Fund in mid-May to support small businesses in adopting low-emission and climate-resilient technologies, according to two senior officials aware of the development.
The bank would infuse $800 million, a major portion of which will be raised to build a $1 billion fund, including the existing Global Climate Fund (GCF) for the project, the officials said on the condition of anonymity. “We are working on the modalities and hope to sign agreement with Green Climate Fund in the mid of May this year. Once the agreement is signed, then disbursal will start happening.”
Micro, small and medium enterprises (MSMEs), which the Economic Survey 2024-25 estimated to contribute about 30% of India’s GDP, are a significant emitter of greenhouse gases and vulnerable to extreme weather events. They often face issues such as a lack of affordable finance and limited technical know-how, restricting them from adopting low-emission and climate-resilient practices. That’s when the International Energy Agency projects India’s energy consumption to increase by 50% by 2030.
Sidbi intends to address these barriers through low-interest MSME loans, which will be disbursed through small finance banks and non-banking financial services companies. The loan would target mitigation investments in energy-intensive clusters in the MSMEs sector.
According to the official quoted earlier, overall, the programme will benefit around 65,000 MSMEs across the country, providing concessional loans to them to promote low-emission, climate-resilient technologies.
In July 2024, the GCF approved $215.6 million to implement Financing Mitigation and Adaptation Projects (FMAP) for Indian MSMEs. The funding comprised $200 million to be offered at concessional rates, while the remaining $15.6 million is in grant support. The programme is expected to reduce greenhouse gas emissions of 35.3 million tonnes.
GCF, a multilateral financing entity, was established by the United Nations Framework Convention on Climate Change in 2010 to support developing countries in mitigating and adapting to climate change.
“The (Sidbi-GFC) project will be executed once the disbursement starts,” said a senior official in the ministry of environment, forests and climate change. “It would not only be a boon to the MSMEs, but would also help in the reduction of emissions and increasing [the sector’s] contribution in the GDP.”
