NITI Aayog suggests setting up of national agency to implement green transition for MSMEs

Government think tank NITI Aayog on Wednesday recommended setting up a national project management agency to implement a programme for MSMEs’ transition towards green energy, as India aims to reach net zero carbon emission goal by 2070.

The Aayog, in its report on ’Roadmap for green transition of MSMEs’, said the national project management agency (NPMA) should be an independent consultative and advisory entity, to be monitored through an inter-ministerial committee.

It suggested that the NPMA should be responsible for driving the on-ground implementation of the programme by closely working with MSME clusters through an effective and transparent cluster selection process.

”The NPMA should identify interested MSME clusters and industrial associations by floating an expression of interest (EoI) that details the cluster selection process for the implementation of identified solutions,” the report said, adding that MSME clusters can form Special Purpose Vehicles (SPVs) to take part in the green transition programme.

In a separate report titled ’Roadmap for Cement Sector Decarbonisation’, the Aayog pitched for increasing the usage of Refuse Derived Fuel (RDF) from municipal solid waste for substituting thermal heating from coal.

It also recommended increased usage of supplementary cementitious materials or clinker substitutes and scaling up Carbon Capture, Utilisation and Storage (CCUS) in the cement industry for capturing CO2 in process emission.

”three solutions, the Indian cement sector may reduce 80-85% GHG emission by 2070,” the report said.

In another report titled ’Roadmap for Aluminium Sector Decarbonisation’, it suggested a three-stage process to reduce the sector’s carbon footprint.

”This includes transition to renewable energy round-the-clock (RE RTC) power and grid connection in the short-term till 2030, followed by adoption of nuclear power in the medium term (between 2030 and 2040) and integration of Carbon Capture Utilisation and Storage (CCUS) with captive coal-based generation in the long term beyond 2040,” the report said.

India’s micro, small and medium enterprises (MSME) industry comprises 69 million (6.9 crore) units, of which about 68.6 million are micro entities.

The share of exports from MSMEs in India’s overall exports is 45.7% and its share in Gross Value Add (GVA) in GDP is 30%. MSMEs’ share in manufacturing is 36.2% and the sector employs about 250 million (25 crore) people.

MSMEs rely heavily on fossil fuels to meet their energy and process requirements, resulting in approximately 135 million tonnes of carbon emissions (MtCO2e) in 2022 alone.

MSMEs face a range of challenges in terms of capacity to undertake green projects, access to reliable finance for the energy transition, lack of awareness on policies and schemes, absence of scalable models, and niche market dynamics that create uncertainty in investment decisions.

At the 26th UN Climate Change Conference (COP26), India committed to achieving net-zero emissions by 2070, reducing carbon intensity by 45% by 2030, and increasing non-fossil energy capacity to 500 GW by 2030.

Achieving these ambitious targets will require significant efforts across all sectors, with industrial decarbonisation playing a crucial role.

Given the diversity of the industrial landscape, a sector-specific approach has been adopted as the pathway toward a green transition.