The air is heavy with the stench of chemicals. Workers lower machine parts into acid vats. Others apply silver coating. In a cabin off the factory floor of Automat Industries—an electroplating micro enterprise in Chhatrapati Sambhajinagar’s Waluj industrial area—sits proprietor Sanjay Kulkarni.
Kulkarni has heard of ‘green transition’ in general but has not implemented an energy efficiency audit or roof top solar to reduce carbon emissions.
“I pay a Rs 3.5 lakh electricity bill for consumption of 2,000 units per month. My enterprise is smallest in the supply chain, and I don’t have funding mechanism to install solar. However, I have bought an electric truck to transport products, saving Rs 15,000 in diesel charges per month. My clients that include Siemens have not asked me deploy EE, solar and waste recycling as of now. Neither has any government agency provided information regarding the same,” he said.
The issues Kulkarni faces sum up all the hurdles Micro, Small, Medium Entreprises (MSMEs) face to turn green. No demand from the domestic market; no awareness drive by the government about the concept of green transition and related schemes of subsidies, loans for technology upgradation; alleged non-cooperative attitudes of government departments; and erratic policies by Maharashtra DISCOMS towards renewable energy.
MSMEs contribute 30 per cent of India’s GDP, employ 110 million people and account for 46 per cent of exports, says a NITI Ayog report. They rely on fossil fuels for energy and processing, causing 135 million tonnes of carbon emissions (MtCO2e) in 2022. The sector is responsible for 3-4 per cent of India’s greenhouse gas emissions.
Maharashtra has 82.6 lakh or 8.26 million MSMEs (17 per cent of India) that employ 1.3 crore or 13 million people and account for 17 per cent of state GDP. The state aims to reduce 4.05 MT CO2e emissions by 2031 through MSMEs, according to the State Energy Efficiency Action Plan (SEEAP) of 2024.
At the 2021 global climate summit (COP26), India committed to go net zero by 2070 and reduce emissions intensity by 45 per cent by 2030 from the 2005 level. All sectors need to participate, and industrial decarbonisation plays a key role.
NITI Ayog plans to implement National Programme for Green Transition of MSMEs through adoption of energy efficiency, green electricity and alternate fuels. This will help MSMEs to access global markets, technology, and economic benefits. The SEEAP of Maharashtra follows the national roadmap.
Ministry of Micro, Small, and Medium Entreprises (MoMSME) in 2023 launched MSE GIFT (Green Investment and Financing for Transformation) Scheme for MSMEs to adopt green technologies through concessional finance, interest subvention and risk-sharing support. GIFT, launched under Raising and Accelerating MSE Performance (RAMP) programme, supported by the World Bank, is expected to benefit 12,000 units in four years till 2025-26. It is supposed to save energy of 1,600GWh, and 1.5 MT CO2e emission annually. However, according to latest data, only 6,581 MSMEs are covered nationally against the goal of 12,000.
MoMSME also launched the MSE Scheme for Promotion and Investment in Circular Economy (SPICE) to support circular economy through promotion of resource efficiency, reduce environmental impact and enhance competitiveness. The scheme in four years from 2023-24 to 2026-27 aims to support 3,400 MSMEs. The number of total beneficiaries till now is seven, according to the ministry dashboard.
Small Industries Development Bank of India (SIDBI) implements both GIFT and SPICE schemes. Bank officials refused provide information of number of MSME beneficiaries in Maharashtra under the schemes.
Maharashtra Small Scale Industries Development Corporation Limited (MSSIDC) did not reply to email and phone calls to share number of beneficiaries MSMEs in the state under GIFT, SPICE and other green transition schemes.
MSMEs owners say there must be schemes to avail loans at concessions like collateral free or subsidies for green transition like schemes for MSMEs in general. But none was aware of GIFT and SPICE schemes.
“Government should provide information on all schemes related to green transition on one portal. Currently, MSSIDC looks after GIFT and SPICE, SIDBI offers loans, MEDA gives subsidy for Energy Efficiency and MSEDCL for RE adoption. Industry owners cannot keep visiting various departments to get information, to apply, to follow up multiple times,” said Arjun Gaikwad, president, Marathwada Association of Small-Scale Industries and Agriculture, an association of over 1,600 MSMEs in and around Chhatrapati Sambhajinagar.
Many industries complain that while the government promotes ease of doing businesses or one window for clearance for businesses, it does not work in practice. “We have to hire agents, paying fees, for the application process to get benefits of the schemes and yet we are not sure of selection,” one factory owner complained, speaking on condition of anonymity. “Commissions need to be paid to officials to get work done. Applicants with contacts of local leaders or officials get preference. Thus, many industries don’t think of applying for the schemes.”
Maharashtra Energy Development Agency (MEDA) is the designated agency under the central Bureau of Energy Efficiency (BEE) to enforce energy conservation in the state, including energy efficiency (EE) in MSMEs. BEE through schemes like ADEETIE and others aims to save up to 30 per cent energy through MSMEs.
MEDA provides Rs 3,000 per unit to empanelled agencies to conduct walk through EE audit and has done 4,031 audits for over 82 lakh (8.2 million) MSMEs across the state.
On ground, 50 per cent of 50 MSME factory owners this correspondent reached out to were not aware of EE audits, 95 per cent did not know about any MEDA subsidy and the few who did know did not avail of it because they found it still too expensive.
“Lack of awareness about EE, funds, information about EE auditors and government schemes bar MSMEs from EE audits and deployment of measures. The ones who carried out EE and fixed/upgraded machineries for EE are either due to demands by their client which are big corporate companies or self-awareness. Otherwise, industries don’t invest in technology upgradation if they don’t see immediate profit,” said Sachin Gaike, who runs Madhura Diecast Pvt Ltd. He has had EE audit done by IIT-Bombay and made changes in compressors, replaced two-star motors with five-star, made a rainwater harvesting pit, and deployed a bio-digester. “I have tier-1 vendors who ask for sustainable practices and often help with information on auditors or technology or funding,” he said. That is the case with the few industries that have clients like Bajaj or Siemens that either export or have to file Environmental, Social and Governance (ESG).
The MoMSME relaunched ZED certificates in 2022 to promote Zero Defect Zero Effect practices among MSMEs for promotion of high standards of manufacturing practices to have least effects on the environment. Through the journey of ZED Certification, MSMEs can reduce wastage, enhance environmental consciousness, save energy, optimally use natural resources, and expand their markets.
Most MSMEs are aware of ZED, and say the process and fees are easy to get. But certification does not add value to attract customers or increase business. According to the ministry’s dashboard, only 6.35 lakh MSMEs got ZED certification against the total registered 7.98 crores (79.8 million) MSMEs on the Udyam portal.
Sandip Belsare, president of Pimpri Chinchwad Small Industries Association, says, “MSMEs that supply products to government departments have to have ZED certification. Otherwise, it does not have value like ISO certification in the domestic and international market.”
In March this year Maharashtra Electricity Regulatory Commission (MERC) issued modified multi-year-tariff (MYT) revising Time of day (ToD) banking rules for solar consumers. Under ToD, RTS consumers including industries can use banked energy during same or lower tariff period. That means solar energy generated during solar banking hours (9am to 5pm) can be used during the same period or normal hours (12 in the night till 9 am) and cannot be used during peak hours (5 pm till 12 night).
The new order is applicable to existing Open Access agreements and long-term transmission contracts against the existing rule that new orders apply prospectively. The same order levied grid support charges of Rs 1.96 per unit till 2026-27, with gradual rise to Rs 2.32 per unit by 2029-30 for RTS projects with capacity more than 10kW.
MSEDCL in February this year linked total sanctioned capacity of RTS for consumers to their consumption pattern for the last 12 months again retrospectively.
More than 15 respondents out of 50 have deployed either RTS or open access, mostly to save bills on electricity consumption as fare per units for industries in Maharashtra are highest across the nation.
But changes in the policy have given nightmares to those having RE/solar. “Industries deploy capacity of RE based on future consumption patterns like expansion plans, additions of EVs and so on. How can you cap capacity at consumption of last 12 months? This is a regressive decision,” said Gaikwad.
Regarding the new ToD rule, MSMEs say that there will be no incentives to adopt solar if they have to buy power during peak hours at the market rate while their additional power generated in solar hours will have no returns. They are also disappointed with addition of grid charges.
“We invested in RTS/Open access plants with average investment of Rs 1-1.5 crore per 1MW plants calculating after five years of playback period, we will get free electricity next 20 years. But now with these new rules applicable to old plants means we will not get planned benefits. This disturbs the budget of operations expenses, profit margins and future plans,” said Mandar Desphande, one of the MSME owners in Chhatrapati Sambhajinagar.
Meanwhile, an MSEDCL official said additional grid charges are applicable to only 2 per cent industrial and 0.55 per cent of commercial customers across the state. He refused to respond to queries about whether industries will suffer heavily due to rules of the newly issued MYT.
MSMEs mostly produce parts of final products to sell to major vendors or corporates. Bajaj and many major automobile companies across India buy automobile parts from MSMEs in Marathwada.
Archana Chaudhary, associate director, Climate Trends, who has been tracking sustainability of industries, stressed that the government should create a buzz about green transition schemes for MSMEs like it did for the MUDRA scheme. “MSMEs play on tight margin. If they have to take loans based on their CIBIL score at market rates, it does not make sense for them to upgrade for green transition. They need monetary returns as well through domestic market demand.”
She added, “Corporates should change policies to green supply chain and ask for green transition of MSMEs through supply of knowledge, technology and funding if needed.”
In 2025, Securities and Exchange Board of India (SEBI) mandated top 1,000 companies by market value to disclose their ESG practices and impact through annual reporting Business Reporting and Sustainability Reporting (BRSR). And they have to report value chain-upstream and downstream that makes 2 per cent or more of the purchases of the company. But MSMEs do not have to do this. And developing domestic demand for green products will take time.
Meanwhile, MSME associations like Marathwada, Pimpri Chinchwad and many other organisations of solar vendors have started to approach MSEDCL, MNRE and High Court for a reversal of MSEDCL’s new rules.
This story was produced with support from Internews’ Earth Journalism Network.