Greening Small Businesses: How MSMEs in India are Adopting Sustainable Practices to Meet Rising Green Consumerism

Abstract

Small businesses play a crucial role in India\'s economy, employing over 30% of the workforce and making a significant contribution to the country\'s GDP. However, due to limited resources and a lack of awareness, they often have a negative impact on the environment. With the rising demand for green consumerism, many small businesses are now adopting sustainable practices to reduce their carbon footprint and align with the expectations of eco-conscious consumers. This descriptive study examines how MSMEs in India are integrating sustainability into their operations to meet this growing demand. It highlights the importance of sustainability for MSMEs, showcases examples of eco-friendly initiatives adopted by Indian MSMEs, and explores the challenges and opportunities they face in transitioning towards greener business practices.

Introduction

India is a country with a rapidly growing economy, and small businesses play a critical role in the country's economic development. According to the Ministry of Micro, Small and Medium Enterprises, At present, the 63 million MSMEs in India account for close to 30 per cent of the gross domestic product (GDP). The sector already contributed to nearly 50 per cent of its exports and in 2022, it has grown by 37 per cent year-on-year (YoY) and employ over 110 million people (MSME Annual Report, 2022). However, small businesses also have a significant impact on the environment due to their consumption of resources, energy, and waste generation. In recent years, there has been a growing demand for green consumerism, and businesses that fail to adopt sustainable practices risk losing out on customers who are willing to pay a premium for eco-friendly products and services. With this in mind, MSMEs in India are now embracing sustainable practices to reduce their carbon footprint and meet the expectations of eco-conscious consumers.

I. THE IMPORTANCE OF SUSTAINABLE PRACTICES FOR MSMES

Small businesses have a significant impact on the environment due to their consumption of resources, energy, and waste generation. As the world is moving towards a sustainable future, small businesses cannot afford to ignore the importance of sustainable practices. In addition to reducing their carbon footprint, sustainable practices can also help small businesses to save money on energy bills, reduce waste disposal costs, and improve their brand image. Moreover, with the rise of green consumerism, businesses that fail to adopt sustainable practices risk losing out on customers who are willing to pay a premium for eco-friendly products and services. Sustainable practices also offer a range of benefits to MSMEs. Firstly, sustainable practices can help small businesses to reduce their operating costs. For example, adopting energy-efficient practices can significantly reduce energy bills, and using renewable energy can help businesses to save money on energy costs in the long run. Secondly, sustainable practices can improve the overall efficiency of the business, leading to increased productivity and profitability. Thirdly, sustainable practices can improve the brand image of the business, making it more attractive to eco-conscious consumers who are willing to pay a premium for sustainable products and services. Finally, adopting sustainable practices can help small businesses to comply with environmental regulations, avoiding penalties and legal action.

II.  EXAMPLES OF SOME SUSTAINABLE PRACTICES ADOPTED BY MSMES IN INDIA

MSMEs in India have adopted various sustainable practices to meet the growing demand for environmentally conscious products and services. Here are some of the sustainable practices that small businesses have adopted:

1. Switching to Renewable Energy Sources: Renewable energy sources such as solar, wind, and hydro power are gaining popularity in India due to the increasing cost of traditional energy sources and the government’s push towards renewable energy. MSMEs are also taking advantage of this trend by installing solar panels on their rooftops and using renewable energy to power their operations. For example, a small textile unit in Surat has installed a solar power plant on its rooftop, which generates 150 kW of power, meeting 60% of its energy requirements. Similarly, a small food processing unit in Himachal Pradesh has installed a 20kW solar power plant, which meets 70% of its energy requirements.
2. Sustainable Waste Management: MSMEs generate a significant amount of waste, which can have a detrimental impact on the environment if not managed properly. Sustainable waste management practices such as recycling, composting, and reusing can help MSMEs to reduce their waste generation and reduce their carbon footprint. For example, a small printing unit in Delhi has implemented a closed-loop recycling system, where all waste paper is collected, recycled, and reused for printing, reducing its paper consumption and waste generation. Similarly, a small food processing unit in Bangalore has implemented a composting system, where food waste is collected and converted into organic compost, which is then used in its garden.
3. Energy-Efficient Practices: MSMEs can significantly reduce their energy consumption and carbon footprint by adopting energy-efficient practices such as using LED lights, installing energy-efficient equipment, and implementing energy-saving measures. For example, a small textile unit in Ludhiana has replaced all its traditional lights with LED lights, reducing its energy consumption by 30% and saving approximately Rs. 3.6 lakh annually. Similarly, a small manufacturing unit in Chennai has implemented energy-efficient practices such as using variable frequency drives in its motors and installing a heat recovery system, which has reduced its energy consumption by 40%.
4. Sustainable Product Design: MSMEs are incorporating sustainable design principles in their products such as using eco-friendly materials, reducing packaging, and designing products for disassembly and recycling. For instance, a Mumbai-based MSME makes eco-friendly sanitary pads from biodegradable materials.
5. Water Conservation: MSMEs are adopting water conservation measures such as rainwater harvesting, using recycled water, and optimizing their water usage to reduce their water consumption and protect water resources. For instance, an MSME in Tamil Nadu installed a rainwater harvesting system to collect and store rainwater for its operations.

III. GOVERNMENT OF INDIA INITIATIVES TO PROMOTE SUSTAINABLE PRACTICES AMONG MSMES

The Government of India has taken various initiatives to promote sustainable practices among MSMEs in the country.

Here are some of the key initiatives:

1. National Clean Energy Fund (NCEF): The NCEF was established in 2010 to promote clean energy and reduce carbon emissions. The fund provides financial support to MSMEs for adopting renewable energy technologies such as solar power, wind power, and biomass.
2. Credit Linked Capital Subsidy Scheme (CLCSS): The CLCSS provides a subsidy of 15% on capital investment up to Rs. 1 crore for MSMEs to upgrade their technology and improve energy efficiency. The scheme also encourages the adoption of clean technologies and waste management practices.
3. Technology and Quality Upgradation Support to MSMEs: The Ministry of Micro, Small and Medium Enterprises provides financial assistance to MSMEs for upgrading their technology and quality standards. The scheme promotes the adoption of sustainable practices such as energy efficiency, waste management, and eco-friendly production.
4. Energy Conservation Building Code (ECBC): The ECBC was launched in 2007 to promote energy-efficient buildings in India. The code sets standards for the design, construction, and operation of commercial buildings, including MSMEs. The code encourages the use of renewable energy sources, energy-efficient lighting and HVAC systems, and building insulation.
5. Zero Defect Zero Effect (ZED) Certification Scheme: The ZED scheme was launched in 2016 to promote quality, productivity, and sustainability among MSMEs. The scheme provides a certification to MSMEs that demonstrate zero defects in their products and zero adverse environmental impact in their operations. The scheme encourages MSMEs to adopt sustainable practices such as energy efficiency, waste reduction, and water conservation.

These initiatives by the Government of India provide MSMEs with financial and technical support to adopt sustainable practices and improve their competitiveness. By promoting sustainability, the government is contributing to the sustainable development of India while also supporting the growth of the MSME sector.

IV. CHALLENGES AND OPPORTUNITIES FOR MSMES TO EMBRACE SUSTAINABLE PRACTICES

Despite the numerous benefits of sustainable practices, MSMEs face several challenges in adopting sustainable practices. Firstly, MSMEs often lack the financial resources and expertise to implement sustainable practices. Many sustainable practices require significant upfront investments, which can be a challenge for small businesses with limited financial resources. Additionally, small businesses may not have the technical expertise or knowledge required to implement sustainable practices effectively. Secondly, there is a lack of awareness and understanding of the benefits of sustainable practices among small businesses. Many small businesses may not be aware of the financial and environmental benefits of sustainable practices, which can make it challenging for them to justify the upfront investment required. Thirdly, MSMEs often face regulatory barriers that make it challenging to adopt sustainable practices. For example, regulations related to renewable energy may be complex and confusing, making it difficult for small businesses to navigate the regulatory landscape.

However, there are also significant opportunities for MSMEs to embrace sustainable practices. Firstly, the government of India has launched several initiatives to promote sustainable practices among small businesses. For example, the government has launched the Sustainable Finance Scheme, which provides financial assistance to small businesses to implement sustainable practices. Additionally, the government has launched the Technology Upgradation Fund Scheme, which provides financial assistance to small businesses to upgrade their technology and equipment to become more energy-efficient. Secondly, there is a growing demand for green consumerism, which can provide a significant opportunity for MSMEs to differentiate themselves from their competitors by offering eco-friendly products and services. By embracing sustainable practices, MSMEs can tap into this growing market and increase their profitability.

Conclusion

Despite the numerous benefits of sustainable practices, MSMEs face several challenges in adopting sustainable practices. Firstly, MSMEs often lack the financial resources and expertise to implement sustainable practices. Many sustainable practices require significant upfront investments, which can be a challenge for small businesses with limited financial resources. Additionally, small businesses may not have the technical expertise or knowledge required to implement sustainable practices effectively. Secondly, there is a lack of awareness and understanding of the benefits of sustainable practices among small businesses. Many small businesses may not be aware of the financial and environmental benefits of sustainable practices, which can make it challenging for them to justify the upfront investment required. Thirdly, MSMEs often face regulatory barriers that make it challenging to adopt sustainable practices. For example, regulations related to renewable energy may be complex and confusing, making it difficult for small businesses to navigate the regulatory landscape. However, there are also significant opportunities for MSMEs to embrace sustainable practices. Firstly, the government of India has launched several initiatives to promote sustainable practices among small businesses. For example, the government has launched the Sustainable Finance Scheme, which provides financial assistance to small businesses to implement sustainable practices. Additionally, the government has launched the Technology Upgradation Fund Scheme, which provides financial assistance to small businesses to upgrade their technology and equipment to become more energy-efficient. Secondly, there is a growing demand for green consumerism, which can provide a significant opportunity for MSMEs to differentiate themselves from their competitors by offering eco-friendly products and services. By embracing sustainable practices, MSMEs can tap into this growing market and increase their profitability.

References

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Copyright

Copyright © 2025 Nikhitha R, Dr. S. Priya. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.