GCF approves $215.6 million for SIDBI’s Financing Mitigation and Adaptation Projects (FMAP) in Indian MSMEs

Green Climate Fund (GCF) has approved $215.6 million in its 39th Board meeting held in Songdo, South Korea on July 17, 2024 for implementing Financing Mitigation and Adaptation Projects (FMAP) in Indian MSMEs.

The programme aims to support Micro, Small, and Medium Enterprises (MSMEs) in India in adopting low-emission and climate-resilient technologies, thereby contributing to the country's Net Zero targets. 

Scaling up Climate Finance for MSMEs

The programme will also target scaling up Climate Finance for MSMEs by leveraging Private Sector Investments from Participating Financial Institutions (PFIs), including Non-Banking Financial Companies (NBFCs), Small Finance Banks (SFBs), and Micro Finance Institutions (MFIs).

These investments will then be used to provide concessional loans to MSMEs to adopt various mitigation and adaptation technologies.

SIDBI is engaged in several activities and is expanding its horizons in the space of Greening the Ecosystem at all fronts, be it startups, MSMEs, rural/unserved/underserved segments/pockets/artisan clusters.

Further, FMAP encourages the Indian Financial ecosystem to scale up climate financing for MSMEs.

"SIDBI is pleased to receive the much-needed support from GCF for greening the MSME ecosystem and to boost climate financing in the Indian Financial system," the firm said.

Utilization of capital

The FMAP facility carries a two-fold target: first, $15.6 million grant support from GCF will be used to build the capacity of various stakeholders, including MSMEs and PFIs, to understand the various low-emission and climate-resilient technologies in the market and the importance of adopting them.

Secondly, $200 million will be utilised to provide the much-needed support of concessional finance to enable scaling up the targeted intervention.

The uniqueness of FMAP is owing to the blended financing facility that will be set up under this programme, by blending $200 million support from GCF with $800 million contribution. 

The blended facility will then be utilised to provide nearly 10000 concessional loans to the MSMEs, an endeavour aimed at promoting low emission, climate resilient technologies and also to boost climate finance for MSMEs from the Indian Financial System.

The FMAP programme is expected to result in GHG emission reductions to the tune of 35.3 million tonnes and the adaptation activities would not only lead to substantial water savings but also build resilience of vulnerable communities benefitting more than 10.8 million beneficiaries.

The FMAP programme encourages a higher level of participation of women in all the activities envisaged.