Interest subvention likely to push energy efficiency among MSMEs

New Delhi: India could offer support to businesses, including micro, small, and medium enterprises (MSMEs), to deploy energy efficient technologies, people familiar with the development told ET.

The power ministry has begun discussions on offering interest subvention under the Assistance in Deploying Energy Efficient Technologies in Industries & Establishment (ADEETIE) Scheme for adoption of energy efficient technologies, people aware of the developement said.

The Bureau of Energy Efficiency's ADEETIE scheme is an online facilitation centre for encouraging and up-scaling energy efficiency financing.

Typically, funding for tech upgrades is expensive for MSMEs.

"To make India energy efficient and for sustainable development, it is important that the MSME sector adopt the green and efficient manufacturing processes," the Bureau of Energy Efficiency had said earlier. The government is keen to bring down this cost to help the sector adopt more new technologies, which may be expensive.

The scheme is likely to be designed in a manner that gives higher interest subvention for more efficiency and energy saving.

Some of such technologies could be automation and control systems for better resource utilization and loss reduction, combustion control systems for boilers, pocket ventilation systems, air-dyeing technology, methane capture technology, among many others.

The allocation for interest subvention is likely to be to the tune of ₹2,000 crore, said an official.

"The scheme could be in phases and in the first phase it could be ₹1,000 crore. Based on the response there could be another tranche. It is being discussed," one of the people said.

MSMEs need support to adopt new technologies and once those technologies have got scale, the financial support can be withdrawn, another person said. The energy efficient technologies may be linked with certain threshold energy savings. Energy efficiency has been at the forefront of the power as well as renewable energy ministries in the wake of rising consumption in the country.

The proposal to offer financial support to MSMEs and other establishments has been in the works for some time and may finally be taking shape, according to the persons.