The Government of India plans to expand the scope of its MSME-SPICE scheme by allowing greenfield units—newly established enterprises—to participate, following lower-than-expected uptake from existing businesses.

Launched in December 2023, the MSME-SPICE (Scheme for Promotion and Investment in Circular Economy) supports micro, small and medium enterprises (MSMEs) in adopting circular economy practices such as recycling, waste reduction, and resource efficiency. The scheme provides capital subsidies to help enterprises upgrade their equipment and production processes to more sustainable standards.

Initially restricted to existing (“brownfield”) units, the scheme has seen limited participation, with only six MSMEs availing incentives so far—far below the target of 3,400 enterprises by FY2026-27. Out of the Rs 5 billion allocated for the initiative, just Rs 20 million has been disbursed to date.

A senior government official told Moneycontrol that expanding the scheme to include new entrants could improve adoption rates. “We expect more MSMEs to invest in plant and machinery that support circular processes once greenfield units are made eligible,” the official said.

Under the current framework, MSMEs can receive a capital subsidy of up to 25 per cent of the cost of plant and machinery, capped at Rs 1.25 million per unit, to help offset upfront investment in green technologies. The scheme is being implemented by the Small Industries Development Bank of India (SIDBI).

By broadening eligibility, the government hopes to stimulate greater participation, encourage sustainable industrial practices, and advance India’s transition towards a greener, more resource-efficient economy.