GCF approves US$ 215.6 million for SIDBI’s Financing Mitigation and Adaptation Projects in Indian MSMEs
New Delhi: Green Climate Fund (GCF) has approved US$ 215.6 million in its 39th Board meeting held in Songdo, South Korea for implementing SIDBI’s Financing Mitigation and Adaptation Projects (FMAP) in Indian MSMEs.
The programme aims to support the Micro, Small and Medium Enterprises (MSMEs) in India to adopt low emission and climate resilient technologies, thereby contributing to the Net Zero targets of the country.
The Green Climate Fund is a fund for climate finance that was established within the framework of the United Nations Framework Convention on Climate Change. Its objective is to assist developing countries with climate change adaptation and mitigation activities.
The programme will also target scaling up Climate Finance for MSMEs by leveraging Private Sector Investments from the Participating Financial Institutions (PFIs) including Non-Banking Financial Companies (NBFCs), Small Finance Banks (SFBs) and Micro Finance Institutions (MFIs) which will then be utilised to provide concessional loans to MSMEs to adopt various mitigation and adaptation technologies.
By empowering MSMEs with access to dedicated climate financing, India not only bolsters its own green initiatives but also sets a vital precedent for sustainable development in the global south.
SIDBI is engaged in several activities and is expanding its horizon in the space of Greening the Ecosystem at all fronts be it startup, MSMEs, rural/unserved/underserved segments/pockets/artisan clusters and so on.
Further, FMAP is a unique endeavour to encourage the Indian Financial ecosystem to scale up climate financing for MSMEs.
The FMAP facility carries a two-fold target: firstly, US$ 15.6 million grant support from GCF will be utilised 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 the same and secondly, US$ 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 US$ 200 million support from GCF with US$ 800 million contribution.
This 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.
FMAP programme encourages higher level of participation of women in all the activities envisaged.
As Accredited Entity and Direct Access Entity to GCF, its second project anchored by SIDBI.
The first approved project, Avaana Sustainability Fund is to kindle the start-up ecosystem by enabling Avaana Capital to obtain GCF funding of US$ 24.5 million for leveraging US$ 120 million.
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