Niti Aayog Proposes National Agency to Drive Green Transition of MSMEs

MSMEs at the Centre of India’s Net-Zero Strategy

As India advances towards its commitment of achieving net-zero emissions by 2070, Niti Aayog has proposed the creation of a National Project Management Agency (NPMA) to support the green transition of micro, small and medium enterprises (MSMEs). The proposal recognises the central role MSMEs play in the Indian economy and their significant environmental footprint. According to official estimates, MSMEs contributed around 135 million tonnes of carbon emissions in 2022, making their decarbonisation critical to India’s climate goals.

The policy think tank has also recommended allocating 8-9% of the national credit guarantee fund to finance sustainability-led interventions for an estimated 69 million MSMEs across the country.

National Project Management Agency: Structure and Role

The proposed NPMA is envisioned as an independent, consultative and advisory body, operating under the oversight of an inter-ministerial committee. Its core mandate would be to drive on-ground implementation of green transition programmes by working closely with MSME clusters through a transparent and effective cluster selection mechanism.

Outlined in Niti Aayog’s report titled Roadmap for Green Transition of MSMEs, the agency would focus on enabling access to technology upgrades, facilitating market access, and supporting enterprises in adopting resource-efficient and low-carbon practices. The Aayog has positioned the initiative as a key enabler of the ‘Viksit Bharat @2047’ vision, linking environmental sustainability with long-term economic competitiveness.

Sector-Specific Decarbonisation Roadmaps

In parallel, Niti Aayog has released targeted roadmaps for carbon-intensive sectors such as cement and aluminium, which are closely linked to MSME supply chains. For the cement sector, the report recommends increased use of refuse-derived fuel (RDF) from municipal solid waste to reduce dependence on coal, greater adoption of supplementary cementitious materials and clinker substitutes, and scaling up Carbon Capture, Utilisation and Storage (CCUS) technologies.

By combining these measures, the Aayog estimates that the Indian cement sector could reduce 80-85% of its greenhouse gas emissions by 2070.

For the aluminium sector, a three-stage decarbonisation pathway has been proposed. This includes a transition to renewable energy with round-the-clock power and improved grid connectivity in the short term (up to 2030), adoption of nuclear energy in the medium term (2030-2040), and integration of CCUS with captive coal-based generation in the long term beyond 2040.

Implications for Industry and Climate Policy

The reports underline the urgency of intervention, noting that aluminium production alone accounted for approximately 2.8% of India’s greenhouse gas emissions, or 83 million tonnes of CO₂ equivalent, in 2023. Without policy and technological interventions, emissions from the sector could rise sharply by 2070.

For MSMEs, the proposed framework signals a shift from compliance-driven climate action to a support-oriented transition model. By combining finance, technology access and cluster-based implementation, the NPMA could help small enterprises reduce emissions, improve productivity and remain competitive in an increasingly carbon-conscious global market.

If operationalised effectively, the initiative could become a cornerstone of India’s climate strategy aligning industrial growth, MSME resilience and decarbonisation under a unified national framework.