June 2, 2023

Great Indian Mutiny

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Investing in the greening of MSMEs should be a high priority for India to achieve sustainable goals.

So far, India is also one of the few major economies in the world whose activities will keep the temperature rise below two degrees in energy conversion. (Image: Pexels.com)

Sustainability for MSMEs: Since 2019, unprecedented climate action has prompted countries and businesses to prioritize climate change. Sustainability is high on the global corporate and government agenda, with many countries competing for carbon neutrality for decades. Interestingly, both the Net Zero Concept and Sustainable Development Goals (SDGs) adopted by the UN are intertwined. Therefore, the transition to a sustainable future for the environment is a matter for the UN. A wide door to access SDGs. In addition, micro, small and medium enterprises (MSMEs), which are considered the backbone of the economy, play a key role in fulfilling global climate responsibilities. In India, the big concern is the challenges and the follow-up support they need to implement sustainable goals.

In addition, India is one of the most vulnerable countries to the effects of climate change: heat waves, hurricanes, changing monsoons and rainfall patterns. Its vast population depends on climate-sensitive sectors for its livelihood. As I said in the first article in this series, recent weather events are shocking to scientists and act as a warning of nature to take action on the weather.

In India, the MSMEs sector contributes about 30 per cent to the GDP. Therefore, the collective objective of building the nation with a sustainable approach makes MSMEs an important part of the Sustainable Economic Development Plan. Furthermore, while considering the MSME segment as a key player, objectives related to the consumption of resources, including fossil fuels, will be met.

MSMEs include the direct impact of external environmental crises on deaths, supply chain disruptions, property damage and inventory loss. In contrast, the indirect effect is damage to public infrastructure such as electricity, communications and transportation systems. As a result, it increases production costs and stops trading.

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In India, MSMEs face many challenges, which have been exacerbated by an unprecedented epidemic. While these actors are struggling to survive, their focus is less on meeting climate responsibility, which shifts to a low-carbon economy that ensures sustainable growth. Moreover, the lack of a strategic roadmap to guide the transition to a low-carbon economy makes the sector significantly vulnerable.

One of the major drawbacks faced by MSMEs is the implementation of energy efficiency standards due to the unfavorable economic scale. They also need to address imbalances in outdated technology, skills, business capabilities and financing, high regulatory burden and limited low-fee financing.

Furthermore, the Covit-19 eruption has adversely affected MSMEs and due to their limited resources, such failures can last longer than expected. Thus, the more than 63 million MSMEs in India, used by about 60 million people, require significant support to achieve the goal of net zero and SDGs. The Union Budget is a major step towards creating an enabling environment for MSMEs in India, especially for government tax cuts and credit support initiatives.

Similarly, the government’s flagship project, Atmanirbar Bharat, announced a number of projects that provided a stimulus package (after the first strike in 2020) to protect the sector from the economic problems caused by the epidemic. Furthermore, the creation of green industry parks and clusters and the establishment of infrastructure facilities will ensure consistent functioning. While these initiatives will enable the survival and growth of MSMEs, there is an urgent need for this division to provide an efficient implementation plan for sustainability-related initiatives, with technology and funding.

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At the same time, large and small Indian companies recognize the importance of undertaking sustainability measures, while the financial and technological burden demands financial intervention and technology sharing. While large Indian companies have developed plans to transition to sustainability, MSMEs do not currently prioritize such goals. To facilitate comprehensive improvement in a sector’s environmental footprint, MSMEs that create value chains for large companies should be encouraged to measure and reduce emissions. Large companies need to encourage their suppliers to design their own carbon track reduction products.

So far, India is also one of the few major economies in the world whose activities will keep the temperature rise below two degrees in energy conversion. Several energy efficiency projects in the country have reduced the intensity of the country’s GDP emissions by 21% since 2005. Developing countries like India are given high priority to invest in fulfilling their international obligations (national status and contributions to ODS). Greening existing MSMEs and actively upgrading them in the future.

Therefore, developing countries need to focus on technology and market innovations that help MSMEs convert to sustainability without adding a regulatory or tax burden. Furthermore, key segments emerging on the path to sustainability should be formed around MSMEs. Waste, eco-tourism, decentralized renewable energy and companies based on organic farming are some of those potential sectors.

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In October 2018, the United Nations Intergovernmental Panel on Climate Change announced that to achieve the 1.5 ° C target, global emissions would have to fall by at least 45% and by 60% compared to 2010 to 2030 levels. Big companies try to build sustainability. A way of life, India is far from adopting net zero targets as it has to include MSMEs segment in its climate campaign. According to experts, if the promises of developed countries are not fulfilled, developing countries will not be able to set very serious goals to set net-zero targets across the economy for the next few decades.

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As India moves towards its 2030 targets, further progress will depend on global financial support and technology sharing. Today, the country is focused on reviving economic growth, lifting millions of people out of poverty and providing energy to its masses. However, realizing the importance of the shift of sectors towards low carbon emissions, the country needs to control emissions in certain selected sectors such as energy and transport. This selection is based on access to effective technical solutions. Although the Government of India and companies create a path to sustainability to ensure global competitiveness, it can only be effectively implemented with the support of developed countries.

Deepak Sood is the general secretary of Assocham. Revealed Comments Author’s Comments.

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