The Small Industries Development Bank of India (SIDBI) has raised $215.6 million from the Green Climate Fund (GCF). Financing for Mitigation and Adaptation in Projects (FMAP) will enable funding to promote low-emission and climate change resilience technologies for Indian MSMEs.
Green Financing Landscape
The $215.6 million funding from GCF is a significant achievement for SIDBI and the green financing processes in India. The funding package consists of $200 million available for the concessional loan and another $15.6 million for grant support this year alone.
The grant shall cover various activities aimed at enhancing the capacity of several key stakeholders, such as the MSMEs and the PFIs that will participate in the projects on low emissions and climate resilience technologies.
Image Source: SIDBI
Objectives of the FMAP Program
The FMAP program is going to focus on different measures to deal with climate change, both mitigation and adaptation. Through the provision of subsidized loans, the program seeks to motivate MSMEs to adopt and acquire innovative technologies that will decrease emissions of greenhouse gases and increase resilience to climate change.
It is estimated that the program will reduce the overall GHG emissions by one-third, or about 35.5 million tonnes, and significantly conserve water for more than 10.8 million people.
Strategic Importance of the Funding
MSMEs are very central to the Indian economy because they contribute a lot to employment and gross domestic product. However, they have a limited capital base to allow them to acquire sophisticated technological tools. The concessional loans given under the FMAP program will allow these enterprises to make such changes sustainable without worrying about high costs.
This program will ensure that vulnerable populations are empowered with tools that will foster water conservation, and assist in combating the effects of climate change. This is even more crucial in areas that are susceptible to natural disasters such as hurricanes or flooding.
Thus, the mentioned FMAP program is also aligned with India’s net-zero targets as a part of the nation’s sustainable development strategy. Low-emitting technologies are going to help improve the quality of the environment in such countries.
Role of the Green Climate Fund
The Green Climate Fund, signed under the United Nations Framework Convention on Climate Change (UNFCCC), is also the biggest dedicated climate fund in the world.
It was created to help developing nations in the fight against climate change by offering them funds for carrying out mitigation and adaptation activities. SIDBI is one of the beneficiaries of the GCF aims at addressing sustainable development challenges and lowering GHG emissions in the world.
Future Prospects
SIDBI has already sanctioned its first project under the FMAP facility for $24.5 million to the Avaana Sustainability Fund. This investment will serve to encourage the development of new startups by providing funding for innovative solutions in the area of sustainability. SIDBI aims to mobilize $1 billion for green financing through GCF funding and green financing from its balance sheet and other sources from the market.
This corpus will be instrumental in funding various projects in the renewable energy sector, such as energy efficiency, energy storage, and e-mobility projects.
Conclusion
The $215.6 million SIDBI and green financing in India will benefit from the Green Climate Fund. Given that the FMAP program will help enhance the capacity of MSMEs in the implementation of low-emission and climate-resilient solutions, it will be instrumental in supporting India to achieve net zero.
It also underlines the need for green financing and the significance of international cooperation in response to climate issues.
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