NITI Aayog proposes national agency to steer MSMEs’ green energy transition

NITI Aayog has proposed the creation of a national project management agency to accelerate the green transition of India’s MSME sector, a move seen as critical to achieving the country’s net-zero emissions target by 2070.

NITI Aayog proposes national agency for MSME green transition

Government think tank NITI Aayog on Wednesday recommended establishing a National Project Management Agency (NPMA) to lead and implement a structured programme aimed at helping micro, small and medium enterprises (MSMEs) transition towards greener and cleaner energy systems.

The proposal comes as India intensifies efforts to meet its long-term climate commitments, including achieving net-zero carbon emissions by 2070.

Role and structure of the proposed NPMA

Independent advisory body under inter-ministerial oversight

According to NITI Aayog’s report titled ‘Roadmap for green transition of MSMEs’, the proposed NPMA should function as an independent consultative and advisory entity, while being monitored by an inter-ministerial committee to ensure coordination and accountability.

The agency would play a central role in converting policy intent into on-ground action by working directly with MSME clusters across the country.

Cluster-based implementation strategy

The report emphasised that the NPMA should lead the on-ground implementation of green transition initiatives through a transparent and effective cluster selection process.

It stated:

”The NPMA should identify interested MSME clusters and industrial associations by floating an expression of interest (EoI) that details the cluster selection process for the implementation of identified solutions,”

The report further noted that MSME clusters would be allowed to form Special Purpose Vehicles (SPVs) to participate in and implement the green transition programme at scale.

Sector-specific decarbonisation roadmaps

Recognising the diversity of India’s industrial ecosystem, NITI Aayog has adopted a sector-specific approach to decarbonisation, releasing dedicated roadmaps for key industries.

Cement sector decarbonisation roadmap

Focus on alternative fuels and carbon capture

In a separate report titled ‘Roadmap for Cement Sector Decarbonisation’, NITI Aayog recommended increasing the use of Refuse Derived Fuel (RDF) sourced from municipal solid waste to reduce dependence on coal-based thermal heating.

The report also called for:

• Higher adoption of supplementary cementitious materials and clinker substitutes

• Scaling up Carbon Capture, Utilisation and Storage (CCUS) technologies to address process emissions

It stated:

”three solutions, the Indian cement sector may reduce 80-85% GHG emission by 2070,”

Aluminium sector decarbonisation strategy

Three-stage transition plan outlined

In another report titled ‘Roadmap for Aluminium Sector Decarbonisation’, NITI Aayog proposed a phased strategy to significantly cut the sector’s carbon footprint.

The report said:

”This includes transition to renewable energy round-the-clock (RE RTC) power and grid connection in the short-term till 2030, followed by adoption of nuclear power in the medium term (between 2030 and 2040) and integration of Carbon Capture Utilisation and Storage (CCUS) with captive coal-based generation in the long term beyond 2040,”

This approach aims to balance energy security with long-term emission reduction goals.

Scale and significance of India’s MSME sector

Key contributor to growth, exports and employment

India’s MSME sector comprises 69 million (6.9 crore) units, of which 68.6 million are micro enterprises.

The sector plays a vital role in the economy:

• 45.7% share in India’s total exports

• 30% contribution to Gross Value Added (GVA) in GDP

• 36.2% share in manufacturing output

• Employment for nearly 250 million (25 crore) people

Carbon footprint and energy challenges of MSMEs

Heavy reliance on fossil fuels

MSMEs continue to depend heavily on fossil fuels for energy and production processes, leading to approximately 135 million tonnes of carbon emissions (MtCO2e) in 2022 alone.

The sector also faces several structural challenges, including:

• Limited technical and managerial capacity to execute green projects

• Restricted access to reliable and affordable finance

• Low awareness of existing climate policies and incentive schemes

• Lack of scalable and replicable business models

• Market uncertainties that discourage long-term green investments

India’s climate commitments and industrial decarbonisation

At the 26th UN Climate Change Conference (COP26), India committed to:

• Achieving net-zero emissions by 2070

• Reducing carbon intensity by 45% by 2030

• Expanding non-fossil energy capacity to 500 GW by 2030

Meeting these targets will require sustained efforts across all sectors, with industrial decarbonisation—particularly MSMEs—playing a decisive role.

Conclusion

NITI Aayog’s proposal to establish a National Project Management Agency marks a significant step toward accelerating the green transition of India’s MSME sector.

By combining cluster-based implementation, sector-specific decarbonisation roadmaps, and institutional oversight, the recommended framework seeks to bridge gaps in finance, technology, and awareness.

As MSMEs account for a substantial share of India’s emissions, exports, and employment, enabling their transition to cleaner energy systems will be critical to achieving the country’s long-term climate goals and ensuring sustainable industrial growth.