The Centre’s MSE Green Investment and Financing for Transformation (MSE GIFT) Scheme saw disbursal of paltry ₹13.22 crore, just 3.7% of the targeted ₹350 crore in interest subvention, according to a parliamentary written response by the Union ministry of micro, small, and medium enterprises (MSMEs).
The MSME ministry’s Lok Sabha disclosure, a written response by minister of state Shobha Karandlaje on 12 March, showed Tamil Nadu had the most MSE beneficiaries at 1,067, followed by Punjab (610) and Rajasthan (608).
The scheme, which began in 2023-24 and runs until 2025-26, is set to end on 31 March. It allows businesses seeking to green their operations—by adopting renewable energy or energy-efficient machinery—to avail concessional financing on loans ranging from ₹10 lakh to ₹2 crore.
The target was to provide interest subvention worth ₹350 crore on loans worth ₹5,800 crore to 5,800 businesses, with the assumption that each loan will be worth ₹1 crore, according to scheme guidelines.
This assumes significance amid carbon taxes, such as the Carbon Border Adjustment Mechanism introduced by the European Union, particularly given that more than 77 million Indian MSMEs account for about 45% of the country’s exports and 30% of its gross domestic product.
Mint reported on 14 July 2025 that only ₹6.87 crore had been dispensed under the scheme, as the Central schemes to help Indian micro and small businesses turn green have found no takers.
The scheme aims to bring together MSMEs seeking to implement green manufacturing practices and financial institutions, such as the Small Industries Development Bank of India (SIDBI), which will also serve as the implementing agency for this scheme, according to its guidelines.
Email queries sent to the spokesperson for the MSME ministry, MSME Green Portal, and SIDBI remained unanswered.
A call for a review
Experts said it is integral to review the scheme's performance and consider amendments.
Former Planning Commission member Arun Maira, who also works as a management consultant, said the first step is an after-action review. “If a particular scheme is not seeing results, there may be some information missing when the scheme was planned. The second step is to analyse what data is required now, to make changes and revise the scheme. In this case, it is integral to consult businesses on why loans for greening of operations did not materialize."
While the scheme’s assumption, according to its guidelines, was that each loan would be ₹1 crore, industry stakeholders said the loans taken for greening operations were considerably smaller.
“Greening of operations begins with monitoring utility consumption and greenhouse gas emissions. Setting up smart monitoring and basic automation for an MSME with 50 machines could cost approximately ₹50 lakh,” said Dattatray Navalgundkar, executive director of the Centre for Industry 4.0 (C4I4) Lab, a Centre-backed non-profit organization that assists MSMEs in upgrading their operations.
Navalgundkar said any manufacturing process that reduces greenhouse gas emissions includes the cost of equipment used to measure energy consumption.
The government has identified 891 eligible technologies under the scheme for various sectors such as food processing, leather, textiles, among others.
The ministry said in its statement that it had conducted 60 workshops via SIDBI to increase awareness of the scheme. But, according to industry stakeholders, India’s MSMEs were not uninterested in the green transition.
“The MSE-GIFT scheme has underperformed not because MSMEs are uninterested in green transition, but because the scheme design relies too heavily on conventional credit mechanisms, lacks technical support structures, and is not aligned with the cluster-based nature of the country's MSME ecosystem,” said Vinod Kumar, president of the India SME Forum, an industry association representing about 97,000 MSMEs.
MSMEs must obtain loans for green operations before receiving government benefits, according to the scheme guidelines. “Many MSEs are already credit-constrained, making them reluctant to borrow additional funds for sustainability upgrades. India’s MSMEs operate largely in industrial clusters such as textiles, ceramics, engineering, leather, and foundries, but the scheme is structured around individual enterprise financing rather than cluster-level green upgrades, which would be far more effective,” said Kumar.