Latest news with #SIDBI
Entrepreneur
2 days ago
- Business
- Entrepreneur
Avaana Capital Draws First Tranche of GCF's USD 24.5 Mn Investment to Boost Deep Tech Innovation
This milestone is anchored by the Small Industries Development Bank of India (SIDBI), under the guidance of the Department of Financial Services (DFS). You're reading Entrepreneur India, an international franchise of Entrepreneur Media. Avaana Capital, a sustainability-focused venture capital firm, has announced the first drawdown from the Green Climate Fund's (GCF) USD 24.5 million investment into the Avaana Sustainability Fund. This milestone is anchored by the Small Industries Development Bank of India (SIDBI), under the guidance of the Department of Financial Services (DFS). GCF, one of the world's largest climate-focused funds, supports developing nations in reducing greenhouse gas emissions and adapting to climate change. Anjali Bansal, Founding Partner at Avaana Capital, said, "We are honoured to partner with SIDBI and the GCF. As India moves toward its Viksit Bharat 2047 vision, accelerating deep tech innovation is both an opportunity and a necessity," she said. "This partnership represents the large economic opportunity for India's deep tech ecosystem—bringing together global capital to build solutions in energy, supply chains, advanced materials, and agriculture." SIDBI Chairman and Managing Director Manoj Mittal highlighted, "SIDBI is promoting sustainability among MSMEs by integrating green finance and supporting eco-friendly business practices. This milestone for Avaana Capital underscores a broader trend where India continues to position itself as a key player in addressing global challenges through technology and innovation." Founded in 2018, Avaana Capital backs startups using deep tech to deliver impactful solutions in energy, food and agriculture, supply chains, and advanced materials. Its portfolio includes companies like GreenGrahi, Eeki Foods, Turno, Dreamfly, Kazam, Eggoz, Farmart, Amperehour, and Aerem. With the support of SIDBI and GCF, Avaana Capital aims to catalyse India's transition to a resilient, future-ready economy through homegrown, cost-effective technologies designed for global impact.
Time of India
4 days ago
- Business
- Time of India
Sustainable development: The rise of green MSMEs
Micro-, small- and medium-sized enterprises (MSMEs) in the country are increasingly embracing green practices, as sustainability is fast emerging as a crucial factor for growth, moving beyond just compliance. While still in the early stages, the shift reflects a broader understanding that environmental responsibility and economic success are interconnected. MSMEs contribute significantly to India's carbon footprint, accounting for 10-15 per cent of industrial sector emissions, which are 3-4 per cent of overall carbon dioxide emissions in India, according to a SIDBI report. The report emphasised that reducing emissions from MSMEs is essential to achieving India's environmental sustainability target and net-zero goal by 2070. Even MSMEs are acknowledging the importance of minimising their carbon footprints, say experts. Gaurav Kedia, Chairman, Indian Biogas Association (IBA), believes that the government support and cost savings are driving India's MSME sector's transition to green energy. 'By 2024, 21 per cent of Indian MSMEs were powered by solar energy, and 31 per cent had begun utilising energy-efficient machinery. Rooftop solar panels reached 11.87 GW, reducing power bills by 30 per cent on average and paying for themselves in three to five years. This change could lower CO₂ by 110 million tonnes each year. Textile and chemical industries are leading this shift, while Gujarat, Maharashtra, and Kerala are making big strides,' says Kedia. Government initiatives like PM Surya Ghar and MSME Sustainable (ZED) Certification are driving progress. If this momentum continues, MSMEs could play a significant role in achieving India's 2030 renewable energy goal, potentially contributing up to 50 per cent to the 500 GW target, adds Kedia. Similarly, Maninder Singh Nayyar, Founder and CEO of the CEF Group, says that the interest from the sector is promising, especially as more MSMEs realise that sustainable transformation can enhance their credibility, open new markets, and future-proof their operations. Unlocking new opportunities India can emerge as a green manufacturing hub by integrating large corporations and MSMEs in a sustainable value chain and capitalising on the growing demand for eco-friendly products and manufacturing practices, believe experts and stakeholders. 'Regulators and policymakers can support this transition by establishing digital public infrastructure for ESG reporting and certification, providing tax benefits and accessible financing for MSMEs and enabling learning at scale for green skills programmes,' says Namrata Rana, National Head of ESG, KPMG in India. According to Miniya Chatterji, CEO, Sustain Labs Paris, the Indian MSMEs are benefiting from the shift to sustainable practices, especially those in global supply chains and sectors with growing demand for eco-friendly products and services. 'This transition is creating new opportunities and value for Indian MSMEs,' says Chatterji. 'For instance, textile MSMEs in Tiruppur that adopted Zero Liquid Discharge systems have seen renewed export opportunities in Europe, where environmental compliance is now a baseline requirement. We are seeing similar shifts in food processing, ceramics, and auto components, where sustainability-readiness directly influences competitiveness,' adds Chatterji. Is green transition expensive for MSMEs? Experts say that MSMEs face challenges in transitioning to green solutions due to high upfront costs and tight margins. However, there are long-term benefits, such as lower utility bills, reduced material waste, tax incentives, and carbon credits. 'The key lies in enabling access: affordable green technologies, subsidies, and awareness programmes. That's where partnerships with start-ups like ours can help,' says Nayyar. According to Kanishk Maheshwari, Co-founder and Managing Director of Primus Partners, micro and small enterprises face challenges in adopting green practices due to limited working capital, minimal access to formal credit, lower technological sophistication, and high upfront costs for energy-efficient equipment and sustainable processes. 'That said, the long-term benefits of going green, such as reduced operational costs (particularly energy expenses), enhanced product marketability, and compliance with future regulatory requirements, can outweigh the initial investment. For many MSMEs, the green transition is not just an environmental imperative but also a pathway to improved resilience and market competitiveness,' says Maheshwari. 'A solar system of 100 kW, which costs Rs 45-60 lakh, can lower electricity bills by up to 90 per cent and recover its cost in 3-5 years. Supporting programmes such as PM Surya Ghar provide aid up to 60 per cent for setting costs, alongside loans with 7-9 per cent interest. Additional tax reductions with solar PV price depreciation make it even easier financially. Infrastructure sharing, leasing, and Energy-as-a-Service models help decrease operational and upgrade expenditures,' says Kedia. The main challenge isn't just cost but rather lack of clarity on cost-effective ways to adopt green practices, say experts and stakeholders. In reality, many sustainability measures, such as energy-efficient motors and solar rooftops, can pay for themselves quickly, with some interventions breaking even in under 18 months, as seen in energy audits in industrial clusters, they add. 'There are financing schemes available—from SIDBI's green loans to World Bank credit lines—but most MSMEs don't know how to access or navigate them. What's missing is not intent but implementation support if we want this shift to scale,' says Chatterji. Immediate challenges Experts say that the MSMEs face three key challenges, including lack of awareness about affordable and scalable green alternatives, limited access to financing, with existing schemes needing better outreach and accessibility, and fragmented infrastructure, particularly in tier II and tier III cities, with underdeveloped supply chains and support systems for green technology. To overcome this, we need more public-private partnerships, grassroots-level training, and tech-driven platforms that handhold MSMEs through their green journey,' say experts. 'Less than 10 per cent of MSMEs are currently accessing formal green finance, primarily because of collateral and credit barriers, and 33 per cent of MSMEs do not know about major schemes, such as ZED, etc. Also, 70 per cent of MSMEs are reliant on diesel generators because of grid unreliability, and more than 60 per cent report relying on machinery that is too old to upgrade. These barriers present significant challenges for the MSME transition,' adds Kedia. While there is some very good policy-based support for a green MSME transition, according to experts, it is mostly disjointed, and there is little financing available under programmes focused specifically on MSME sustainability. 'Many of these programmes are also quite complex to comply with. Several reports indicate that 56 per cent of MSMEs face a lack of trained technicians, and only 5 per cent are engaged in clean-tech R&D. Some longer-term programmes for bringing MSMEs to a green transition would include expanding the operational Green Credit Guarantee Fund, scaling up collective infrastructure models, and using digital tools to streamline the process for applying to access public subsidies,' says Kedia. MSMEs require practical support to drive their green transition, including sector-specific technical advisors, simplified ESG tools, better visibility in green procurement and access to global markets that meet sustainability standards, according to experts and stakeholders. Without these essentials, the green transition will likely remain inaccessible to most MSMEs, they add.
Business Upturn
02-06-2025
- Business
- Business Upturn
Unlocking MSME Credit Growth in India Requires a Stronger Focus on Rural and Tier 2-3 Markets
Despite rising formal credit supply, India's MSME sector continues to battle a ₹30 lakh crore credit gap—most pronounced in rural and women-led enterprises. SIDBI's latest report highlights the urgent need for inclusive, localized financial solutions to unlock growth in India's tier 2, tier 3 cities and rural heartlands. By Riddhima Jain Published on June 2, 2025, 16:51 IST India's MSME sector continues to face a significant credit gap of ₹30 lakh crore, despite an overall increase in formal credit supply, as highlighted in SIDBI's latest report 'Understanding Indian MSME Sector: Progress and Challenges'. The rural-urban divide is particularly stark. MSMEs in rural regions face a credit gap of 32%, compared to 20% in urban areas. This shortfall is rooted in factors such as sparse lender presence, limited industrial infrastructure, and information asymmetry. Meanwhile, women-led MSMEs face an even steeper 35% gap, often turning to informal sources due to barriers in accessing structured financial support. Despite this, MSMEs are showing digital readiness: 90% now accept digital payments, although only 18% have accessed digital lending platforms pointing to a latent but significant opportunity for growth in digital credit. There's a pressing need to refocus the lens on Bharat — the tier 2, tier 3 cities and rural heartlands that form the roots of India's economic tree. These regions are no longer just untapped markets; they are drivers of inclusive growth waiting to be empowered. 'While the expansive branches are our urban centers, the roots: India's tier 2, tier 3 cities, and rural belts hold untapped potential. As businesses invest in these regions, they don't just cultivate markets; they cultivate hope, opportunity, and resilience,' said Pankaj Gupta, Chief Business Officer, Godrej Capital. By nurturing these hidden economic engines with tailored credit solutions and strong on-ground partnerships, the industry can shift from addressing gaps to unlocking enduring growth. As the ecosystem evolves, bridging the MSME credit gap will depend on how effectively financial institutions, fintechs, and policymakers collaborate to design solutions that are not just accessible, but truly inclusive. The next phase of India's growth story will be written in its smallest towns and remotest corners — provided the financial roots grow deep and wide. BusinessesMake in IndiaMSME
Indian Express
25-05-2025
- Business
- Indian Express
P Chidambaram writes: Why no jobs for most youth?
There are two recent reports on the Micro, Small, Medium Enterprises (MSME) sector, one by the Small Industries Development Bank of India (SIDBI) and the other by NITI Aayog. Both are official reports. There is also the Annual Survey of Unincorporated Sector Enterprises (ASUSE). What are the basic facts about the Micro, Small and Medium Enterprises (MSME) sector that can be gathered from the two reports? 🔴 Under the current classification, Micro enterprises have an investment limit of up to Rs 2.5 crore and turnover limit of up to Rs 10 crore; Small have up to Rs 25 crore and up to Rs 100 crore; and Medium have up to Rs 125 crore and up to Rs 500 crore. By this classification, it will be clear that all but a few thousand enterprises in India are MSME. 🔴 The distribution of the total number of MSMEs is skewed in favour of Micro: the shares are Micro — 98.64 per cent; Small — 1.24 per cent; and Medium — 0.12 per cent only. 🔴 Ownership is proprietorship (59 per cent), partnership (16), LLP (1), private limited company (23) and public limited company (1). 🔴 There are approximately 7,34,00,000 MSMEs in India. Of these, about 6,20,00,000 are registered on the Udyam Portal as on March 2025. 🔴 There is a credit gap of about 24 per cent in the MSME sector (about Rs 30 lakh crore); in the services sub-sector the gap is 27 per cent and in women-owned enterprises it is 35 per cent. 🔴 MSMEs contributed approximately 45 per cent of India's merchandise exports in 2023-24. In absolute terms, the number of exporting MSMEs was 1,73,350 in 2024-25 (that is a fraction of 1 per cent of the total number of MSMEs). The key goods that are exported are ready-made garments, gems and jewellery, leather goods, handicrafts, processed foods and auto components — all but one, low technology goods. 🔴 There is a plethora of credit support schemes and development schemes for MSMEs. Reading the reports, I counted at least two subsidy schemes, four credit guarantee schemes and at least thirteen development schemes. The Budget for 2025-26 announced a scheme for first-time entrepreneurs and a credit card scheme. It also announced a new Fund of Funds, a Deep Tech Fund of Funds and a revamped Street Vendors Nidhi (PM SVANidhi). 🔴 MSMEs are the primary source of employment generation. It is claimed that the total employment generated by the sector is around 26 crore. Now, let's come to the central question of this essay. Among the major challenges in the MSME sector, the reports list — ** Skilled labour shortages, skill gaps and difficulty in attracting talent. These findings tell the whole story of unemployment in the country. It is fair to assume that larger industries (with investment of over Rs 125 crore and turnover of over Rs 500 crore) employ persons with higher educational qualifications and higher skills which the bulk of the unemployed do not possess. On the other hand, MSMEs need labour; yet, if they have labour shortages and difficulty in attracting talent, why? The regrettable but inescapable conclusions are, firstly, that the applicants for jobs do not have the education or the skills to fill the jobs. And, secondly, that the jobs on offer are not attractive because of the structure of the enterprise or the emoluments. Matching the structural facts and the employment outcomes, it is not difficult to infer the reasons why there is high unemployment among the youth of India. 🔴 the population of India in April 2025 was 146 crore. 🔴 the labour force participation rate (LFPR) is the percentage of the population that is either working or actively seeking employment. It is 55.6 per cent or about 81 crore. 🔴 the worker population ratio (WPR) defines the proportion that is employed among the total population. It is 52.8 per cent or about 77 crore. 🔴 the absolute number of persons who are unemployed is the difference, namely, 4 crore. That's a large number but, remember, it is out of the number 'actively seeking employment'. There are many millions who have given up seeking employment for different reasons. the official unemployment rate is 4 crore/81 crore which equals 5.0 per cent. The overwhelming number of MSMEs are 'micro'— 98.64 per cent. Together with the fact that proprietorship and partnership constitute 75 per cent of all MSMEs, it is abundantly clear that the bulk of the 26 crore 'employed' are family members and relatives working in family-run enterprises. It is the 'small' and 'medium' (1.36 per cent of MSMEs or about 10,00,000) that actually employ people where there is a master-and-servant relationship. 🔴 The 'supply' side of jobs has to come from the 10,00,000 MSMEs. 🔴 The 'demand' side for jobs has to come from the young men and women who are school drop-outs or have a school education or have a basic arts or science degree. The potential employers are hit by lack of credit, the oppressive regulations, and the multiple schemes and compliances. The potential employees are hindered by the lack of quality education, lack of skills and absence of training — in short, there is little 'talent'. Governance should focus on these shortcomings. The first stop is school education with skills training. The next stop is helping SMEs (note that I have dropped the M) with just one liberal credit-cum-interest subsidy scheme. Keep it simple.
The Hindu
23-05-2025
- Business
- The Hindu
Commercial credit portfolio of MSMEs grew 13%: report
The commercial credit portfolio for Micro, Small and Medium Enterprises (MSME) sector grew 13% year-over-year (YoY) as the overall credit exposure increased to ₹35.2 lakh crore as of March 31, 2025, according to TransUnion CIBIL and SIDBI's MSME Pulse Report for May 2025. This trend was largely driven by an increase in credit supply to existing borrowers, the report said. Overall MSME balance-level delinquencies improved to 1.8%, a 35 basis points drop from 2.1% in March 2024, primarily driven by the borrower segment with exposure of ₹50 lakh to ₹50 crore. The borrower segment with exposure up to ₹10 lakh, however, witnessed a slight deterioration at 5.8% in March 2025 compared to 5.1% in March 2024. Similarly, the borrower segment with exposure from ₹10 lakh to ₹50 lakh also saw a marginal rise in the delinquency level to 2.9% as compared to 2.8% in March last year. While the share of New-to-Credit (NTC) MSME borrowers to total new loan originations continued to be strong at 47% as of March 2025, it was lower than the share of 51% one year back. The report added that the trade sector contributed the greatest proportion of NTC borrowers at 53%, while the manufacturing sector saw the highest YoY growth (70%) in the number of NTC borrowers originating a commercial loan. Four states dominate commercial lending Maharashtra, Gujarat, Tamil Nadu, Uttar Pradesh and Delhi continued to dominate commercial lending, together accounting for 48% of the value of overall originations in the quarter ending March 2025. While the manufacturing sector had the greatest share of originations in Maharashtra, Gujarat, Tamil Nadu and Delhi, Uttar Pradesh had the most originations to the trade sector. Manoj Mittal, Chairman and Managing Director, Small Industries Development Bank of India (SIDBI) said that though the credit flow to the MSME sector has improved over the years, it still has an addressable credit gap. According to Bhavesh Jain, MD and CEO, TransUnion CIBIL, 'For MSMEs to achieve sustainable growth, it is imperative that they receive assistance in accessing formal credit and guidance in debt management.'
