Need to Strengthen the Policy Framework Encouraging MSMEs to Adopt Greener Technologies

While global demand and supply chains make the transition to environment-friendly processes, there is no map for Indian MSMEs to make risk free switch to greener. Need to strengthen the policy framework encouraging MSMEs to adopt greener technologies

MSMEs Contribution to Pollution

Contributing 30% to GDP and providing employment to around 11 crore people, MSMEs play a crucial role in the development of India. The sector not only curtails regional disparities but also balances the distribution of wealth. Though the government has taken initiatives to promote MSMEs, the idea of making these firms sustainable remains confined to papers. ASSOCHAM, India’s Apex Chamber for Commerce and Industry reported in 2019 that six crore MSMEs in India contribute 70% to the total industrial pollution.

Green MSMEs Can Create More Jobs at Low Cost

The University of Massachusetts 2017 study reveals that an investment of USD one million in renewable energy (RE) and energy efficiency (EE) can create more than seven jobs as against 2.65 jobs in fossil fuel industries. Countries such as Germany, France, and South Korea provide net green fiscal stimulus, so their MSMEs do not miss opportunities to make the risk-free transition.

Need to Impose Taxes and Provide Subsidies According to Green Investments Made

As more and more corporate giants go greener, the pressure to adopt cleaner technologies for MSMEs increases. Hence, there is a need to frame policies that regulate global companies. This will encourage them to share the load of promoting the usage of the green process and products in MSMEs. Also, the government must bring environmental regulations that impose taxes on negative externalities and give subsidies for green investment. Besides, carrying out research and development along with strengthening the linkages between academia and MSMEs, is equally important. Further, managers must be trained in risk management that promotes the participation of MSMEs in environment-friendly products.

In all, focusing just on growth is not sufficient. However, the MSMEs cannot adopt green technologies if their existence is always at stake. Therefore, this multidimensional issue requires research, innovation, and inclusion of MSMEs in climate adaptation plans.

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