India’s Micro, Small, and Medium Enterprises (MSMEs) contribute significantly to manufacturing, employment, and exports but face challenges like rising input costs and supply chain regulations. Transitioning this sector to energy-efficient operations is vital for India’s economic growth. Access to capital, technology, and markets will be key to this transition.
Digitalization and Credit Profiles
Platforms like the India Stack and Open Credit Enablement Network (OCEN) can help bridge this gap. By using digital records like GST filings and bank statements, lenders can assess the creditworthiness of MSMEs, especially for cash-flow-based loans. However, only 12% of MSMEs are digitized, highlighting the need for greater adoption of digital financial practices.
Financing Energy Transition
India’s MSME sector consumes significant energy, especially in emission-intensive activities. Transitioning to energy-efficient practices requires access to credit. The OCEN can help provide capital to finance this transition. Using digital credit profiles, lenders can offer loans tailored to MSMEs’ needs based on data from platforms like SIDHIEE and SAMEEEKSHA, which highlight potential energy and cost savings.
The Role of Digitalisation
Public institutions like Sidbi must ensure MSMEs are digitized, enabling access to financing through platforms like the OCEN. Data from these transactions should be shared with other lenders to expand credit access. Co-lending models can help smaller financiers reach MSMEs, particularly in energy-intensive clusters. Digitalization will be key to driving MSMEs’ green transition.
