Government think tank NITI Aayog has recommended the creation of a national project management agency to accelerate the transition of micro, small and medium enterprises (MSMEs) towards green energy, as India works towards its net-zero carbon emissions target by 2070.

In its report titled “Roadmap for Green Transition of MSMEs”, NITI Aayog proposed that the National Project Management Agency (NPMA) should function as an independent consultative and advisory body, overseen by an inter-ministerial committee. The agency would be responsible for driving on-ground implementation of green transition initiatives by working closely with MSME clusters through a transparent cluster selection framework.

The report suggested that the NPMA should identify interested MSME clusters and industrial associations through an expression of interest process outlining selection criteria and implementation pathways. It also recommended that MSME clusters form special purpose vehicles to participate in the green transition programme.

In a separate report on the cement sector, NITI Aayog highlighted the potential of increasing the use of refuse-derived fuel from municipal solid waste as a substitute for coal-based thermal energy. The report also recommended greater adoption of supplementary cementitious materials, clinker substitutes and the scaling up of carbon capture, utilisation and storage technologies. According to the Aayog, these measures could help the Indian cement sector reduce greenhouse gas emissions by 80–85 per cent by 2070.

In its roadmap for the aluminium sector, NITI Aayog proposed a three-stage decarbonisation strategy. This includes a transition to round-the-clock renewable energy and grid integration in the short term until 2030, followed by the adoption of nuclear power between 2030 and 2040, and the integration of carbon capture, utilisation and storage with captive coal-based generation beyond 2040.

India’s MSME sector comprises around 69 million enterprises, of which approximately 68.6 million are micro enterprises. MSMEs contribute about 45.7 per cent of India’s exports, 30 per cent of gross value added in GDP and 36.2 per cent of manufacturing output, while employing around 250 million people.

The sector remains heavily dependent on fossil fuels for energy and process requirements, resulting in an estimated 135 million tonnes of carbon emissions in 2022. MSMEs face multiple challenges in undertaking green projects, including limited technical capacity, constrained access to finance, low awareness of policy frameworks, lack of scalable business models and uncertainty in investment decisions.

At COP26, India committed to achieving net-zero emissions by 2070, reducing carbon intensity by 45 per cent by 2030 and increasing non-fossil energy capacity to 500 GW by 2030. Achieving these targets will require coordinated action across industries, with industrial decarbonisation emerging as a critical priority.

NITI Aayog emphasised that given the diversity of India’s industrial landscape, a sector-specific approach will be essential to drive an effective and sustainable green transition.