Power Ministry to Introduce Rs 1,000-Crore Scheme for Energy Efficiency in MSMEs

The Ministry of Power is set to unveil a Rs 1,000-crore initiative aimed at promoting energy efficiency among micro, small, and medium enterprises (MSMEs), according to a report from The Economic Times. The scheme, called Assistance in Deploying Energy Efficient Technologies in Industries & Established (ADEETIE), will provide financial aid through interest subvention. Small enterprises will be eligible for a 5% interest subsidy, while medium enterprises will receive a 3% subsidy on loans for adopting energy-efficient technologies.

The Bureau of Energy Efficiency (BEE), which was established under the Energy Conservation (Amendment) Act, 2022, will manage ADEETIE. This program is designed to help reduce energy costs and emissions within the MSME sector. “Guidelines have been prepared and will be shared with the industry to ensure smooth implementation,” a government official stated, also noting that large companies would not be included in this scheme.

Technologies that may be supported under ADEETIE include automation systems, combustion control systems for boilers, methane capture, and air dyeing. An ADEETIE online platform will be created to streamline the funding process for energy-efficient projects.

The proposal for financial support aimed at enhancing energy efficiency in MSMEs has been in discussion for some time. During the Energy Efficient Summit 2023, BEE had indicated plans for a larger interest subvention scheme amounting to Rs 12,000 crore, with Rs 6,000 crore specifically earmarked for MSME energy efficiency efforts, according to The Hindu. Interest subsidies ranging from 4-8% for such projects were suggested previously, with the Power Finance Corporation as the proposed nodal agency, as noted by Mint.

The MSME sector plays a crucial role in India’s economy, contributing over 40% of industrial exports and around 30% of the GDP. The importance of energy efficiency is underscored by the rising power demand, which peaked at 250 GW in May 2024 and is expected to reach 277 GW by FY27 and 366 GW by FY32, as per the Central Electricity Authority. The MSME sector, which accounts for 25% of industrial energy consumption and generates approximately 110 million tonnes of CO2 emissions annually, is projected to see a 50% increase in energy use by 2030. Enhancing energy efficiency in this sector is vital for achieving national net zero targets.

Disclaimer: This summary is for informational purposes only. Efforts have been made to ensure accuracy; however, readers are advised to consult official sources and industry experts for comprehensive details and guidance related to the ADEETIE scheme and other government energy policies for MSMEs.