GIFT

MSE Green Investment and Financing for Transformation (MSE-GIFT) Scheme
Ministry of Micro, Small and Medium Enterprises, Government of India

Chapter 1
Introduction
Micro and Small Enterprises (MSEs) are the backbone of India's manufacturing and service economy, contributing significantly to GDP, exports, employment generation, and regional industrial development. However, many MSEs continue to operate using conventional technologies that consume higher levels of energy, generate greater greenhouse gas emissions, and have a larger environmental footprint.
Recognizing the need to facilitate India's transition towards a low-carbon and resource-efficient economy, the Ministry of Micro, Small and Medium Enterprises (MoMSME), Government of India, has launched the MSE Green Investment and Financing for Transformation (MSE-GIFT) Scheme under the Raising and Accelerating MSME Performance (RAMP) Programme.
The scheme is designed to improve access to affordable institutional finance for adoption of green technologies and environmentally sustainable business practices by Micro and Small Enterprises. It combines interest subvention, risk-sharing support, and capacity building to reduce the financial barriers associated with green investments. The Small Industries Development Bank of India (SIDBI) has been designated as the implementing agency for the scheme.

Chapter 2
Background and Rationale
India has committed to reducing the emissions intensity of its GDP by 45 percent by 2030 and achieving Net Zero emissions by 2070. The MSME sector, while being a major contributor to industrial output, also accounts for significant energy consumption and environmental impacts.
Studies indicate that MSMEs possess enormous potential for:
Energy efficiency improvements
Renewable energy adoption
Waste minimization
Cleaner production technologies
Circular economy practices
Water conservation
Despite these opportunities, many enterprises face constraints such as:
High upfront investment costs
Limited availability of affordable finance
Lack of collateral security
Limited awareness of green technologies
Inadequate technical expertise
To bridge these gaps, the Government introduced the MSE-GIFT Scheme with a total budgetary outlay of ₹478 crore, providing concessional finance, risk mitigation support, and technical assistance to encourage green investments.

Chapter 3
Objectives of the Scheme
The scheme aims to create an enabling ecosystem for sustainable industrial development by pursuing the following objectives:
Promote adoption of environmentally sustainable and resource-efficient technologies.
Improve access to institutional finance for green investments.
Reduce the incremental cost of adopting clean technologies.
Encourage financial institutions to prioritize lending for green projects.
Improve competitiveness of Indian MSEs through energy-efficient production.
Support climate change mitigation and adaptation initiatives.
Create awareness regarding green manufacturing practices.
Facilitate knowledge sharing and technical handholding for enterprises.

Chapter 4
Key Features of the Scheme
The important features include:
Central Sector Scheme under the RAMP Programme.
Implemented by SIDBI.
Applicable to eligible Micro and Small Enterprises.
Supports investments in green and climate-friendly technologies.
Offers 2% annual interest subvention on eligible term loans.
Provides a Risk Sharing Facility (RSF) for eligible loans.
Covers projects up to ₹2 crore under the financial assistance component.
Includes Information, Education and Communication (IEC) activities for awareness, capacity building, energy audits, and digital support.

Chapter 5
Budget and Scheme Components
The scheme has a total financial outlay of ₹478 crore and comprises three major components:
1. Interest Subvention Component (₹350 crore)
Eligible Micro and Small Enterprises receive an interest subvention of 2% per annum on eligible term loans up to ₹2 crore for a maximum period of five years.
2. Risk Sharing Facility (₹125 crore)
A dedicated risk-sharing mechanism is provided through SIDBI to encourage lending institutions to finance eligible green projects with reduced credit risk.
3. Information, Education and Communication (IEC) Component (₹3 crore)
The IEC component supports:
Awareness campaigns
Capacity-building programmes
Energy audits
Technology demonstrations
Digital loan management platforms
Monitoring and evaluation
Knowledge dissemination and best practices.

Chapter 6
Eligible Beneficiaries
The scheme is applicable to:
Micro Enterprises
Small Enterprises
Udyam-registered MSEs
Existing enterprises undertaking green transformation
New enterprises adopting eligible green technologies
The scheme is implemented in phases, with Phase I covering Micro and Small Enterprises. Extension to Medium Enterprises is subject to approval by the Scheme Steering Committee.

Chapter 7
Eligible Green Projects
Financial assistance is available for investments in projects contributing to environmental sustainability, including:
Renewable Energy
Solar rooftop systems
Wind energy
Biogas
Renewable power generation
Energy Efficiency
Energy-efficient machinery
Waste heat recovery
Efficient motors
Green manufacturing equipment
Water Management
Water recycling
Wastewater treatment
Rainwater harvesting
Water-efficient technologies
Pollution Control
Air pollution control systems
Emission reduction technologies
Cleaner production processes
Waste Management
Recycling systems
Waste-to-energy projects
E-waste management
Circular economy initiatives
Green Buildings
Energy-efficient industrial buildings
Sustainable construction materials
Clean Transportation
Electric vehicles
Hybrid vehicles
EV charging infrastructure
Innovative Climate Technologies
Any new technology demonstrating measurable environmental benefits may also be considered under the scheme, subject to approval.

Chapter 8
Financial Assistance
Interest Subvention
Eligible borrowers receive:
Interest subvention of 2% per annum
Applicable on term loans up to ₹2 crore
Maximum support period of 5 years
The assistance directly reduces the effective borrowing cost, thereby making green investments more financially viable.
Guarantee Fee
For loans covered under the Risk Sharing Facility, guarantee fees broadly follow the applicable CGTMSE fee structure, with concessions available for women entrepreneurs, SC/ST entrepreneurs, Persons with Disabilities, Agniveers, enterprises in Aspirational Districts, and certain special-category regions.

Chapter 9
Risk Sharing Facility (RSF)
The Risk Sharing Facility has been designed to reduce the lending risk faced by financial institutions.
Key features include:
Coverage for eligible loans up to ₹2 crore.
Administered by SIDBI.
Available through Participating Lending Institutions (PLIs).
Can be combined with available collateral under a hybrid risk mitigation approach.
Encourages greater lending for environmentally sustainable projects.
The RSF complements the interest subvention component by improving lender confidence and facilitating access to institutional finance.

Chapter 10
Operational Framework
The implementation process is as follows:
The MSE identifies a suitable green investment project.
The enterprise approaches a Participating Lending Institution (PLI).
The PLI appraises the project for technical and financial viability.
The loan is sanctioned.
SIDBI provides the applicable interest subvention and/or risk-sharing support.
The enterprise implements the project.
Progress and environmental outcomes are monitored by the implementing agencies.
The scheme also provides technical handholding through awareness programmes, cluster outreach, energy audits, and knowledge-sharing initiatives.

Chapter 11
Roles and Responsibilities
Ministry of MSME
Overall policy formulation
Budget allocation
Monitoring and review
SIDBI
Nodal implementing agency
Administration of interest subvention
Management of the Risk Sharing Facility
Capacity building and IEC activities
Monitoring and reporting
Participating Lending Institutions
Project appraisal
Loan sanction and disbursement
Submission of eligible claims
Monitoring of borrower performance
Beneficiary Enterprises
Adoption of approved green technologies
Compliance with loan conditions
Timely repayment
Submission of required project information.

Chapter 12
Monitoring and Evaluation
The scheme provides for a structured monitoring framework through dedicated Project Management Units at the national and state levels.
The monitoring system captures:
Number of loans sanctioned
Amount of green investments mobilized
Interest subvention released
Geographic distribution of beneficiaries
Sector-wise project details
Environmental outcomes
Energy savings
Greenhouse gas emission reductions
The scheme is subject to periodic review and independent evaluation to assess its effectiveness and impact.

Chapter 13
Expected Outcomes
The MSE-GIFT Scheme is expected to:
Benefit approximately 12,000 MSEs.
Mobilize nearly ₹5,800 crore in green lending.
Achieve annual energy savings of approximately 1,600 GWh.
Reduce annual greenhouse gas emissions by around 1.5 million tonnes of CO₂ equivalent.
Generate substantial savings in energy costs for MSMEs while improving their competitiveness and environmental performance.


The MSE Green Investment and Financing for Transformation (MSE-GIFT) Scheme represents a strategic initiative of the Government of India to mainstream sustainable manufacturing within the Micro and Small Enterprise sector. By combining concessional finance, risk-sharing support, and technical assistance, the scheme reduces financial barriers to adopting clean technologies and environmentally responsible production systems.
The scheme not only supports India's climate commitments but also strengthens the long-term competitiveness, resilience, and resource efficiency of Indian MSEs. It is expected to play a significant role in accelerating green industrial transformation, promoting responsible business practices, and enabling inclusive economic growth through sustainable enterprise development.