NITI Aayog's MSME green transition roadmap: what it means for your unit

MSMEs and their emissions, in the roadmap's figures

The roadmap counts about 69 million micro, small and medium enterprises (MSMEs) in India. It says they account for 45.7% of exports, 30% of gross value added and 36.2% of manufacturing, and employ about 250 million people.

It estimates MSME emissions at about 135 million tonnes of carbon dioxide equivalent (MtCO₂e) in 2022. CSTEP's estimate, quoted in our energy efficiency guide, is higher at 150 to 200 MtCO₂e a year, so treat both as estimates. Five sub-sectors (paper, textiles, steel re-rolling, foundry and forging) produce more than 60% of the roadmap's total. Coal and grid electricity make up about 54% of the energy MSMEs use and cause around 90% of their emissions. Citing Central Electricity Authority (CEA) figures, it notes that 79% of India's electricity came from fossil fuels in 2022.

The roadmap also makes the point buyers already make: MSMEs sit inside larger companies' Scope 3, the emissions in their supply chains. Your Scope 1 and 2 (from the fuel you burn and the electricity you buy) are part of your customer's footprint, so a credible figure from you replaces an estimate in their report.

What the programme proposes

The proposed National Programme for Green Transition of MSMEs would run in three phases: 2025 to 2030, 2030 to 2032 and 2032 to 2035. Each phase starts only after the earlier one succeeds. Its main parts are:

• a National Project Management Agency (NPMA) to find interested clusters, pool their demand and run tenders
• energy service companies (ESCOs) that install efficient equipment at no upfront cost and are paid from the savings; the roadmap puts payback at usually two to four years
• an 8% to 9% share of the MSME credit guarantee fund to cover payment defaults, with payouts linked to measured results
• a capital subsidy of up to 15% for small and medium units registered on the government's Udyam portal that cut specific energy use by 20% or more
• a capital subsidy for rooftop solar up to 3 kW in micro units
• a monitoring, reporting and verification (MRV) framework, with a free tool for MSMEs to record emissions and progress
• a Regulatory Impact Assessment before any new mandate is placed on MSMEs

The order matters. The roadmap treats efficiency as the foundation, because every unit of energy you stop using is one you never need to make green. Green electricity comes next, then new fuels for process heat.

Clusters named for the first phase

For energy efficiency, the roadmap names ten clusters in textiles, paper, steel re-rolling and forging: Surat, Bhiwandi, Vapi, Tiruppur, Jalna, Ludhiana, Morbi, Mandi Gobindgarh, Raipur and Coimbatore. Together they could cut about 12 MtCO₂e, a third of the lever's total.

For green electricity it names Bhiwandi, Jalna, Jagadhri, Surat, Muzaffarnagar, Rajkot, Tiruppur, Ludhiana, Jamnagar and Coimbatore. Units can take rooftop solar from a renewable energy service company (RESCO), or buy renewable power through Green Open Access, which needs demand of 100 kW or more. About 90% of MSMEs have loads under 100 kW, the roadmap notes, which is why it proposes pooling demand.

For alternative fuels, the first phase proposes support for natural gas: equipment retrofits and extension of city gas networks, in consultation with the Petroleum and Natural Gas Regulatory Board. Textiles, steel, forging and foundry are proposed for early action. Biomass, compressed biogas and electrification follow as supply develops.

The records the programme will run on

Under the roadmap, measured results trigger the money. Service companies would be covered for payment defaults only when agreed results are met, such as lower Scope 1 intensity against a baseline or energy saved. These are the records you will be asked for.

1. 1Gather twelve months of recordsElectricity bills, fuel purchases and production, plus your equipment list.
2. 2Build your baselineEnergy by source, emissions by scope, and emissions per tonne of output, with every factor and its source written down.
3. 3Talk to your cluster associationAsk whether it plans to respond when the NPMA calls for interest, once the programme opens.
4. 4Agree the baseline in writingBefore signing any service agreement, agree the figures your savings will be measured against.

For the practical measures behind the efficiency lever, see our guide to energy efficiency for Indian MSMEs.

How ESGen helps

Keep one set of numbers for buyers, lenders and programmes, and update it every year. The ESGen platform holds your energy figures by site with the bill behind each one, plus a calculation log and data checks. Its BRSR lens can arrange the same figures in SEBI's format for a listed customer's value chain questions. Our team can help you answer the questionnaires buyers send.

One limit to know. The platform's built-in emission factors are the UK government's, published by the Department for Energy Security and Net Zero (DESNZ). It does not yet calculate Indian electricity emissions with the CEA grid factor, so ask us how your emissions figures will be handled.

ESGen is not an energy auditor, verifier or service company, and does not apply for programme support on your behalf. We help get your records ready for the people who do. See our manufacturing page, or book a demo and we will look at your records with you.