The Role of MSMEs in India's Sustainable Development

Micro, small, and medium enterprises (MSMEs) are the heartbeat of global economies, fuelling growth, creating jobs, and cultivating innovation. These enterprises employ up to 70 per cent of workers worldwide and account for 50 per cent of the world's gross domestic product (GDP). In India alone, they contribute nearly thirty per cent to the country's GDP and have employed around 110 million people. Therefore, the role they play in promoting sustainability should not be seen as an obligation but as a path towards long-term growth and resilience.

The dire need for sustainability within MSMEs originates from a sequence of intertwined concerns. The major reason that is pushing MSMEs to take a stand and choose sustainability is the increasing customer awareness about climate change. Now that consumers are exploring more environmentally friendly products, authorities have responded by imposing strict laws that compel small enterprises to execute eco-friendly methods of operation.

These regulations are part of a broader global shift, where sustainability is taking centre stage in supply chains. Established companies are now looking for collaborations with partners who are aligned with their ideals, resulting in an impact that affects the entire business environment. Therefore, small and medium-sized enterprises that align with the latest trends are most likely to discover opportunities to grow their reputation as a brand and successfully cushion themselves against potential risks.

There are multiple sustainable practices that can be utilised by MSMEs that can also help with business profitability.  Programmes such as sustainability boot camps and green financing forums are designed to attract MSMEs, encouraging them to embrace eco-friendly solutions that are both cost-effective and impactful. By participating in these initiatives, MSMEs can discover basic yet effective changes, such as swapping traditional lights for LED lights and integrating energy-efficient devices.

These small initiatives yield significant advantages over time, facilitating considerable savings and supporting larger endeavours that strengthen the nation's dedication to achieving net zero emissions by 2070. Each of these efforts is essential in promoting a sustainable future while nurturing enduring business prosperity for MSMEs.

Sustainability plays a pivotal role in elevating brand recognition and earning customer trust, according to recent poll findings that indicated 8 out of 10 customers are willing to spend extra money for sustainably produced or sourced goods and products. This clearly illustrates the fact that MSMEs that display a commitment to sustainability may draw in eco-conscious clientele. Acquiring certifications such as ISO 14001 can additionally increase the credibility of the brand and open doors to new possibilities in contemporary markets. This certification plays a key role in addressing environmental aspects while mitigating any negative impacts and adhering to legal compliance.  

The implementation of sustainable practices requires an integrated approach, and that commences with energy efficiency. MSMEs can achieve significant cost savings and environmental benefits by focussing on reducing energy consumption. Regular equipment maintenance is also important in this process, as it fully ensures that machines operate at peak efficiency and consume less energy. Plus, embracing energy-efficient technologies empowers small businesses to cut down on their energy consumption without sacrificing productivity. By harnessing renewable energy sources like solar power, they can move away from non-renewable fossil fuels, which aligns perfectly with the objectives of the Jawaharlal Nehru National Solar Mission. This initiative firmly exhorts MSMEs to embrace solar energy as it helps them lower their dependency on non-renewable assets. Cutting down the reliance helps pave the way for a more sustainable future.

Waste management is another crucial area where MSMEs can have an immense effect. By emphasising reduction, reuse, and recycling as key business objectives, businesses can significantly lower operational costs while mitigating environmental harm. With an ever-evolved circular economy concept pushing this goal, many Indian MSMEs are already turning waste into valuable products—for example, transforming plastic into construction materials—showing there's innovation potential within such frameworks. 

As the global economy transitions towards low-carbon models, MSMEs face both opportunities and challenges in shifting towards reduced emissions. Carbon credit trading provides one strategy to mitigate carbon footprints. Active participation in carbon markets can kickstart more revenue generation while contributing towards climate mitigation efforts.

Technology can play a central role in driving sustainable practices for MSMEs by providing digital tools that bolster the monitoring of energy use, advance asset use, and distinguish regions for enhancement. By integrating these tools, MSMEs can enhance their operational efficiency and significantly reduce their environmental impact. For instance, IoT technology can revolutionise garbage collection through real-time tracking, guaranteeing more viable and effective squander management processes. This seamless integration of technology into everyday operations enables MSMEs to embrace sustainability without compromising productivity.

Moreover, digital platforms can also serve as powerful connectors and they allow MSMEs to share best practices in sustainability with one another. This exchange of knowledge promotes a community-driven approach to sustainability, where startups can learn from each other's successes and challenges. These platforms also act as a bridge to connect MSMEs with potential customers and partners who prioritise sustainability. All in all, digital platforms can expand their market reach and help them to collaborate to further drive green initiatives.

To speed up this transition, proper government support is crucial. Financial incentives that include subsidies, tax breaks, and low-interest loans can nudge small and mid-sized enterprises to invest in green technologies. As a result, it makes sustainable practices more effortlessly accessible and financially viable. Government organisations such as the Confederation of Indian Industry (CII) have actively started working with MSMEs to promote sustainable practices. One of the most promising initiatives that has been executed by CII is their GreenCo rating system, which has the responsibility of evaluating the environmental performance of companies. 

Boosting the sustainability of MSMEs is a win-win situation for everyone involved. By combining eco-friendly practices, these businesses can enhance their competitiveness and profitability. Governments, industries, and financial institutions must join forces and construct a supportive framework that enables MSMEs to adopt sustainable methods. By joining forces, these small enterprises can emerge as dynamic catalysts of economic growth and environmental responsibility, igniting transformative changes across various sectors and communities.

(Sunil Singhvi is President at IEEMA.)