With over 82 lakh MSMEs contributing 40% to the state's GDP, Maharashtra must support energy-intensive sectors like foundries in their transition to cleaner, climate-compliant operations
Nagpur: Maharashtra’s Micro, Small, and Medium Enterprises (MSMEs) constitute the largest concentration of such units in India, playing a significant role in the state’s industrial economy. These enterprises contribute substantially to employment and manufacturing output, particularly through energy-intensive sectors such as foundries. This segment also accounts for a significant share of industrial energy use and greenhouse gas emissions in the state, highlighting the need for focused interventions on emissions reduction and energy efficiency.
As the world marks World MSME Day on June 27, attention is turning toward the environmental impact of India’s MSMEs and the need for climate-aligned industrial growth. Greenhouse gas (GHG) emissions from India's MSME sector are projected to increase from approximately 30 million tonnes of CO₂-equivalent (MtCO₂e) in 2016–17 to over 72 MtCO₂e by 2029–30, more than doubling in just over a decade, data from The Energy and Resources Institute (TERI) highlights. Maharashtra is among the top contributors to emissions owing to its extensive and diverse MSME footprint.
Recognizing this, Maharashtra’s State Energy Efficiency Action Plan (SEEAP) has set ambitious targets to reduce carbon emissions by up to 55.15 million metric tonnes of CO₂ by 2031 through comprehensive energy efficiency and decarbonisation measures across key sectors, with MSME clusters being a major focus (BEE, 2023). The plan emphasizes a cluster-based approach—targeting hubs like Pune Forging, Kolhapur Foundry, and Bhiwandi Textile—using mandatory energy audits, technology upgrades, and policy incentives to maximise energy savings and achieve emissions reductions of over 4.05 million metric tonnes of CO₂ by 2031. This is equivalent to taking nearly 900,000 cars off the road for a year or eliminating the annual emissions from burning 2 million tonnes of coal.
This focus is particularly significant as Maharashtra accounts for 17% of all MSMEs in India, with over 82.63 lakh registered units engaged across a range of sectors, including automotive components, general engineering, electronics, textiles, and metals. These enterprises generate approximately 40% of the state’s Gross State Domestic Product (GSDP) and provide livelihoods to over 1.3 crore people. However, many of these units, especially those in metal casting and foundry operations, continue to rely on high-emission fuels such as coke and coal, and have yet to fully benefit from energy efficiency tools or emissions tracking mechanisms.
The foundry sector, in particular, has emerged as a hotspot for industrial emissions. Foundries are manufacturing units that melt and cast metal (typically iron or steel) into critical components for vehicles, machinery, and infrastructure. This process consumes enormous amounts of energy, both thermal and electrical, and produces significant quantities of carbon dioxide and particulate matter. In Maharashtra, an estimated 8,259 MSME units are operating in the secondary steel and foundry sector alone. Collectively, they are estimated to consume 11.8 million tonnes of oil equivalent (Mtoe) in energy annually and emit 58 MtCO₂, according to data reported through SAMEEEKSHA, India’s energy efficiency platform for MSMEs.
“Foundries are indispensable to India’s manufacturing economy, which boasts the world’s second largest foundry sector, but they’re also incredibly hard to decarbonise,” said Rahul Patil, Chairman, Indian Institute of Foundrymen - Kolhapur. “These units typically function on thin profit margins, use legacy equipment, and don’t have the resources or policy clarity needed to modernise in line with global climate norms.”
This challenge is further intensified by global trade developments such as the European Union’s Carbon Border Adjustment Mechanism (CBAM), which imposes carbon tariffs on energy-intensive imports from countries without comparable climate action. As MSMEs contribute approximately 44% of India’s total exports, especially in sectors like iron, steel, aluminium, and engineering goods, their ability to comply with such international regulations will directly impact the viability of India's export economy. Without interventions to help MSMEs adopt carbon accounting, emissions tracking, and energy-efficient technologies, thousands of small manufacturers across Maharashtra may find themselves locked out of international markets.
“There is already a visible appetite among MSMEs in Maharashtra to adopt cleaner practices,” said Dr Suhas Buddhe, former Vice-President, Vidarbha Industries Association. “But the scale of change required cannot happen through individual efforts. What’s needed is an enabling ecosystem, one that brings together financing, policy, training, and recognition.”
Small-scale pilots have shown promising results in the past. In clusters where energy audits and clean technology adoption have been introduced, foundry units have recorded energy savings of 20–30%, with additional cost savings on fuel, reduced maintenance, and improved workplace safety. However, these pilots seem to remain scattered and unsupported at scale. While Maharashtra has adopted a cluster-based approach to support MSMEs through initiatives like Maharashtra State Industrial Cluster Development Program (MSICDP) and State Energy Efficiency Action Plan (SEEAP), experts argue that there is still room to make financing easier, help smaller businesses meet climate regulations, and expand successful clean technology projects to more industrial clusters.
“Maharashtra can lead in ‘ease of decarbonisation’ by activating a supportive ecosystem for micro and small enterprises. As climate action and business sustainability increasingly become synonymous, the state is well positioned to champion collective progress,“ Vishwajeet Poojary who leads Asar’s work on Maharashtra State Climate Action.
