The Green Climate Fund (GCF) has approved $215.6 million for the Small Industries Development Bank of India’s (SIDBI) Financing Mitigation and Adaptation Projects (FMAP) in Indian micro, small, and medium enterprises (MSMEs).

The projects aim to help MSMEs adopt low-emission and climate-resilient technologies. They will also increase climate finance for MSMEs by using private sector investments from non-banking financial companies, small finance banks, and microfinance institutions. These investments will provide loans to MSMEs to adopt various mitigation and adaptation technologies.

The FMAP program is projected to reduce 35.3 million tons of greenhouse gas emissions and significant water savings.

This is the second SIDBI project GCF has financed.

The FMAP facility, which is an endeavor to encourage the Indian financial ecosystem to scale up climate financing for MSMEs includes the $15.6 million grant support from GCF, which will be used to build the capacity of various stakeholders, including MSMEs and participating financial institutions (PFIs), to understand the low-emission and climate-resilient technologies in the market and the significance of adopting these technologies. It also includes $200 million, which will be utilized to scale up the targeted intervention.

As a development financial institution, SIDBI has promoted new technologies among MSMEs and has boosted climate financing in the Indian financial system.

In March 2024, Avaana Capital, a climate-technology investor, received an investment of $120 million, including $24.5 million from the GCF. The investment also saw the SIDBI, one of Avaana’s partners, participate as the GCF’s accredited entity.

In October 2018, SIDBI launched a Decarbonization Challenge Fund (DCF) to support innovative and scalable technologies, projects, and solutions that are environmentally friendly, clean, and have high impact potential. This competitive mechanism will crowd-source innovative solutions across themes that address industrial decarbonization challenges such as energy efficiency, renewable energy, clean transportation, pollution prevention control, and green buildings.

DCF was launched as part of SIDBI’s Partial Risk Sharing Facility for Energy Efficiency program and is supported by the World Bank.