Evaluating the Effectiveness of the MSME Green Credit Scheme in Promoting Sustainable Entrepreneurship in Thane, Maharashtra

Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-10(II)| October2025 56 Evaluating the Effectiveness of the MSME Green Credit Scheme in Promoting Sustainable Entrepreneurship in Thane, Maharashtra Neha Alshi1, Bhakti Ambavane2 1, 2 Assistant Professor at B.N.N. College (Arts, Science & Commerce), Bhiwandi [email protected] Manuscript ID: JRD -2025-171012 ISSN: 2230-9578 Volume 17 Issue 10(II) Pp. 56-59 October 2025 Submitted: 22 Sept. 2025 Revised: 04 Oct. 2025 Accepted: 15 Oct. 2025 Published: 31 Oct. 2025 Abstract Environmental sustainability has become an essential focus of India’s economic development strategy. With growing challenges such as climate change and pollution, the Government of India has introduced several initiatives to promote green growth, one of which is the MSME Green Credit Scheme under the MSE-GIFT program. This scheme encourages Micro, Small, and Medium Enterprises (MSMEs) to adopt eco-friendly technologies by offering concessional loans, risk-sharing mechanisms, and capacitybuilding support.This research paper evaluates the effectiveness of the MSME Green Credit Scheme in promoting sustainable entrepreneurship in Thane district, one of Maharashtra’s industrial regions. The study is based on secondary data collected from government publications, journals, and institutional reports. Findings reveal that green financing among MSMEs has increased to 26% by 2025, and around 76% of enterprises believe sustainability contributes to profitability. However, major barriers such as limited awareness (73% of MSMEs unaware of eligibility), technical knowledge gaps, and collateral constraints continue to restrict the scheme’s overall reach and impact.The research concludes that while the MSME Green Credit Scheme has initiated a positive shift towards environmentally responsible business practices, there remains a need for improved implementation and wider awareness. Policy recommendations include enhanced district-level training programs, a unified digital green finance portal, simplified certification for sustainable MSMEs, and improved data reporting under BRSR-lite frameworks. Strengthening these areas can help maximize the scheme’s potential and advance India’s commitment to sustainable industrial growth. Introduction In recent times environmental sustainability has been the focus area of the economic development strategy in India With rising concerns over climate change, pollution, and natural resource scarcity, the Government of India has emphasized the need for green growth with environmentally sustainable business practices. Micro, Small, and Medium Enterprises (MSMEs) form the core of this revolution as they are responsible for a significant proportion of industrial output, employment generation, and innovation. But bad financial situations normally constrain their ability to utilize environment-friendly technologies and eco-friendly operations.To solve this problem, the government introduced the MSME Green Credit Scheme to promote eco-friendly entrepreneurship by offering financial rewards and easier access to credit for businesses that adopt green practices. The scheme motivates MSMEs to use cleaner production methods, renewable energy, better waste management, and energy-efficient technology. Its goal is to support both economic growth and environmental protection. Thane district, one of Maharashtra’s main industrial areas, has a large number of MSMEs involved in manufacturing, services, and trade. Studying how well the MSME Green Credit Scheme works in Thane can give useful insights into how effectively it encourages sustainable business practices at the local level. However, there has been very little research on how the scheme impacts such industrially developed regions.The aim of this research paper is to study how well the MSME Green Credit Scheme helps promote sustainable entrepreneurship in Thane. Quick Response Code: Website: https://jrdrvb.org/ DOI: 10.5281/zenodo.17464074 Creative Commons (CC BY-NC-SA 4.0) This is an open access journal, and articles are distributed under the terms of the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International Public License, which allows others to remix, tweak, and build upon the work noncommercially, as long as appropriate credit is given and the new creations ae licensed under the idential terms. Address for correspondence: Neha Alshi, Assistant Professor at B.N.N. College (Arts, Science & Commerce), Bhiwandi How to cite this article: Neha Alshi, Bhakti Ambavane,(2025). Evaluating the Effectiveness of the MSME Green Credit Scheme in Promoting Sustainable Entrepreneurship in Thane, Maharashtra,Journal of Research & Development, 17(10(II)),56-59 Original Article Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-10(II)| October2025 57 It will look at how aware MSMEs are of the scheme, how easily they can access it, how they use the funds, and what benefits they gain from green activities. The study will also show how the scheme supports environmental sustainability and offer useful insights for policymakers to improve future green credit programs for MSMEs. Literature Review Small and medium-sized enterprises (SMEs) form the backbone of the world economy, accounting for close to 90 percent of the total number of businesses and more than half of overall employment. In most emerging nations, they are a driver to promote economic diversification and poverty alleviation but lack adequate finance to access. Since 1.2 billion young people are going to enter the labor market in the coming ten years and employment generation is restricted by the limited creation of jobs, SME finance is crucial to drive investment, innovation, and job creation. Business growth is largely driven by access to finance. and it also facilitates social inclusion, especially empowering women and youth, hence leading to sustainable and inclusive economic growth. (Mahesh et al., 2022)-The aim of the study is to analyse how Sustainable Finance (SF) helps to fuel economic growth and help sustainable development by encouraging green business practices. The study is concerned with financial mechanisms offered by organizations like SIDBI, NITI Aayog, and World Bank to help MSMEs shift towards green production. The research methodology pursued is theoretical in nature, with the analysis of past literature, policies, and case studies regarding green finance instruments such as Green Bonds, Climate Funds, and Impact Finance. The results indicate that efficient sustainable finance initiatives are necessary to build green infrastructure and pursue India's Net Zero Emission by 2070. Moreover, government schemes such as Priority Sector Lending (PSL) for green initiatives and the Social Stock Exchange as proposed further promote investment in sustainability. Overall, the report highlights that embedding ESG and SDG principles in financial systems can make a big difference in India's sustainable economic growth. (Katkar & Sinhgad Institute of Business Administration and Research, 2022) - The purpose of the paper is to evaluate the influence of SF on MSMEs towards green growth and sustainable development. Based on a theoretical framework and secondary data, the study applies a descriptive approach to examine the different instruments of green financing supported by NABARD, SIDBI, NITI Aayog and World Bank. Key insights The research suggests that climate finance is a critical enabler for MSMEs to build green infrastructure and support India’s climate targets and ESG aspirations. On the whole, this research points out that sustainable finance is important not just in developing environmental consciousness but also in unlocking profitable and creative financial opportunities (Gunawan, 2025) -The research will focus on the contribution of MSMEs to sustainable development and economic recovery in the developing countries. It underscores that lack of access to finance, combined with policy uncertainty and shortage of technical expertise are significant impediments for green MSME growth. The paper demonstrates from available literature that credit access alone is not enough but supportive policy frames and innovative finance mechanisms are also crucial. Given the results, it appears that developing green MSMEs requires a combination of financial, policy and technological support. (Nafeesa & Joe, 2024)- The research investigates the impact of green entrepreneurship practices on SMEs growth and performance in India. Drawing on 60 SME Cross-Sectional Survey, examines the cognizance, actualization and nexus of green entrepreneurship elements and organisational results. The research uncovers the strong environmental awareness and responsibility of many SMEs; with A significant number of them are green-certified (G-certified). A positive nexus is found between green cognition, entrepreneurial culture and performance, with constrained financial support. The research highlights a necessity for increased government incentives, entrepreneurship training, and organizational collaboration to enhance sustainable SME development. Although some studies have discussed the impact of sustainable finance on MSME development, few of these have discussed the on-ground efficiency of individual government initiatives like the MSME Green Credit Scheme in specific regional industrial clusters such as Thane. That is what this study aims to do. Research methodology This study is grounded in Indian views on government assistance to green entrepreneurship, previous research on MSME financing and sustainability, and green credit program resultsThis study Indian views on government assistance to green entrepreneurship. Previous research on MSME finance and sustainability. Research on green credit and its impact This study depends on secondary data. Secondary data collected from various journals, books and also published record use of online records and websites. Theoretical Source: Information has been sourced from books, newspapers, trade journals, e-journal and government agencies, trade associations, etc Objectives 1. To understand the structure and objectives of the MSME Green Credit Scheme. 2. To analyze the implementation and reach of the scheme among MSMEs in Thane. Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-10(II)| October2025 58 3. To assess the scheme’s impact on promoting sustainable and eco-friendly entrepreneurship in Thane District. 4. To identify challenges and propose measures for improving scheme effectiveness at the local level. 4.The MSME Green Credit Scheme The MSME Green Credit Scheme, implemented under the MSE Green Investment and Financing for Transformation (MSE-GIFT) program, promotes eco-friendly industrial practices among micro and small enterprises. The scheme’s structure comprises three main components: 1. Interest Subvention Scheme (₹350 crore corpus): Provides 2% interest subvention for green projects between Rs 10 lakh and Rs 2 crore for a period of five years annually. 2. Risk-Sharing Facility (₹125 crore corpus): Offers 75-85% of partial credit guarantees to lenders for loans financing RE, resource efficiency and PC projects. 3. Capacity Building Fund (₹25 crore): Supports MSME lenders and entrepreneurs in training and technology adoption. (Inclusive Green Finance Working Group (IGFWG) et al., 2022) Eligible companies will be MSMEs involved in renewable energy, energy efficiency, waste management and water treatment or environmental protection. Execution is through SIDBI and its partner financial institution which conducts evaluation of projects under a "Green Loan" classification framework wherein E&S compliance, measurable carbon benefits are assessed (PR Newswire, 2025) (Jena, 2025) Statistical Trends in Green Financing and MSME Participation 2020-2025 Indicator 2020 2024 2025 (Q1) Trend / Observation Source MSMEs with access to formal credit 14% — 20% Increased access to institutional credit among MSMEs NITI Aayog (n.d.), Enhancing Competitiveness of MSMEs in India MSME participation in green finance — 7% 26% Significant growth in green financing adoption NITI Aayog (n.d.) Sustainability Perception Index (SPeX) — — +20% rise Reflects growing MSME awareness and sustainability inclination SIDBI–Dun & Bradstreet (2025) MSMEs expecting profitability from sustainability — — 76% Majority view sustainability as profitable SIDBI–Dun & Bradstreet (2025) MSMEs integrating environmental policies — — 66% Increasing adoption of ecofriendly business practices SIDBI–Dun & Bradstreet (2025) Despite these gains, a knowledge gap persists—73% of MSMEs remain unaware of green financing products, and only 51% of those who apply secure funding, highlighting the uneven efficacy of outreach campaigns. Distribution of Loans by Sector The loan distribution under the scheme favours clusters in high-emission sectors: 1. Renewable Energy (solar, wind, and water) – 34% of green credit approved, focusing on rooftop solar and biomass. 2. Waste and Water Management – 26% covers a range of technologies including effluent treatment, recycling, and reuse of waste water. 3. Green Manufacturing and Energy Efficiency – 40%, with loans for upgrading machinery, cleaner production processes and reducing emissions in auto-components, textiles, and chemical sectors. (Inclusive Green Finance Working Group (IGFWG) et al., 2022) (NITI Aayog Releases Report on “Enhancing Competitiveness of MSMEs in India,” n.d.) 4. Regional clusters such as Thane, Pune, and Nashik have demonstrated significant participation due to stronger SIDBI and MSME-DI facilitation networks. Barriers to Access and Implementation The biggest barriers to MSME participation are: 1. Awareness Gap: 73% of MSMEs are unaware of eligibility or application process for green finance(Staff and Bfsi, 2025) 2. Technical Knowledge Gap: Ability to measure sustainability outcomes is limited resulting in lenders unwilling to classify loans as “green”(Vikas and Patil, 2025) Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-10(II)| October2025 59 3. Collateral & Cost Barriers: Even with adequate collateral, high upfront costs and delayed financial returns inhibit uptake(Inclusive Green Finance Working Group (IGFWG) et al., 2022), (Vikas and Patil, 2025) 4. Data & Compliance: The absence of sustainability data in the BRSR compliance norms restricts institutional credit flows to smaller businesses (Vikas and Patil, 2025) Findings The evaluation of the MSME Green Credit Scheme in Thane reveals the following insights: 1. Proof of Successful Outreach: Growth in formal lending (20%) and substantial increase in green credit use (26%) shows early progress of advertising green entrepreneurship (Niti Aayog Releases Report on "Enhancing Competitiveness of MSMEs in India," n.d.) 2. Article 2 (Entrepreneurial Readiness Changes): 66% of Micro, Small and Medium Enterprises (MSMEs) intend to expand environmental efforts, and 76% believe that sustainability is profitable (PR Newswire, 2025) 3. Sustained Entrepreneurship Barriers: Awareness (73% difference), technical capability, and collateral of barriers to broader uptake of sustainable strategies (Vikas & Patil, 2025) 4. Institutional Gaps: Fragmented collaboration between government bureaucracies, banks, and industry associations has limited capacity for expediting sustainability (Niti Aayog Releases Report on "Enhancing Competitiveness of MSMEs in India," n.d.) Conclusion The MSME Green Credit Scheme has made a meaningful difference to support local businesses alignment with India’s green growth objective, particularly for industrial clusters in Thane. The provision of concessional finance and risksharing has facilitated a transformation in the mindsets of MSMEs to link sustainability with profits. However, weak policy implementation, limited awareness, and a lack of standard monitoring frameworks have prevented the initiative from achieving its full effect. Policy Recommendations 1. Increase Understanding and Capability: Organize district knowledge awareness programs, led by SIDBI, MSMEDI, and district industry associations. 2. Remove Barriers to Access: Utilize a single digital Green Finance Portal for transparent eligibility assessment and quicker loan access. 3. Strengthen Financial Benefits: Provide interest rate discounts and tax deduction incentives for verified green investments, similar to some formulations proposed in the EU and US. 4. Embed ESG Requirements: Establish an easy-to-acquire national MSME sustainability certification based on a simplified version of the EU SME framework. 5. Promote Cluster-Based Approaches: Replicate Thane’s green financing pilot to other Maharashtra clusters with appropriate risk-sharing instruments. 6. Require Reporting: Expand sustainability reporting under BRSR-lite for MSME applicants seeking access to green credit. Reference 1. Mahesh, M., Aithal, P. S., Sharma, K. R. S., Srinivas University, EWIT, & AIT Bengaluru. (2022). Impact of sustainable finance on MSMEs and other companies to promote green growth and sustainable development. International Journal of Applied Engineering and Management Letters (IJAEML), 6(1), 60-76. (2022). ISSN: 2581-7000.,. https://ssrn.com/abstract=4038990 2. Nafeesa, S., & Joe, H. (2024, January 31). Effectiveness of green entrepreneurship practices in driving the growth of Indian small and medium-sized enterprises. https://ijcms.in/index.php/ijcms/article/view/642 3. 12116375.pdf https://share.google/v42W2zq0gkPoGIcCW 4. Katkar, S. & Sinhgad Institute of Business Administration and Research. (2022). Effect of sustainable finance on MSMEs to promote green growth and sustainable development. In International Journal of Innovative Research in Technology (Vol. 9, Issue 2, pp. 698–699) [Journal-article]. https://ijirt.org/publishedpaper/IJIRT156018_PAPER.pdf 5. Gunawan, W. B. (2025). MSME Sustainability as the Key to Sustainability: Role and Contribution of MSMEs to Sustainability with a Bibliometric Approach and Literature Review. Equator Journal of Management and Entrepreneurship (EJME), 13(1), 1–17. https://doi.org/10.26418/ejme.v13i1.89630 6. Government of India, Ministry of MSME – for official details about the MSME 7. Green Credit Scheme / MSE-GIFT program. https://dcmsme.gov.in 8. Small Industries Development Bank of India (SIDBI) – which implements the MSE 9. Green Investment and Financing for Transformation (GIFT) scheme. https://www.sidbi.in