The GCF (Green Climate Fund) has approved $215.6 million to implement Financing Mitigation and Adaptation Projects (FMAP) for Indian Micro, Small, and Medium Enterprises (MSMEs). This decision was made during the 39th Board meeting held in Songdo, South Korea, on July 17, 2024.
Supporting MSMEs in Climate Adaptation
The FMAP aims to help Indian MSMEs adopt low-emission and climate-resilient technologies, aligning with India’s Net Zero targets. The initiative focuses on scaling up climate finance for MSMEs by leveraging private sector investments from Participating Financial Institutions (PFIs), such as Non-Banking Financial Companies (NBFCs), Small Finance Banks (SFBs), and Micro Finance Institutions (MFIs).
SIDBI Role and Activities
The Small Industries Development Bank of India (SIDBI) is spearheading this effort. SIDBI is involved in various activities to promote a green ecosystem for startups, MSMEs, and rural or underserved segments. The FMAP program encourages the Indian financial ecosystem to scale up climate financing for MSMEs.
“SIDBI is pleased to receive the much-needed support from GCF for greening the MSME ecosystem and boosting climate financing in the Indian financial system,” the firm stated.
Utilization of Funds
The FMAP facility has a dual focus:
- Capacity Building: $15.6 million from the GCF will be used to build the capacity of MSMEs and PFIs to understand and adopt low-emission and climate-resilient technologies.
- Concessional Finance: $200 million will be provided as concessional loans to MSMEs to support the adoption of these technologies.
Blended Financing Facility
A unique aspect of FMAP is its blended financing facility, which combines $200 million from the GCF with $800 million from other sources. This blended facility aims to provide nearly 10,000 concessional loans to MSMEs, promoting low-emission and climate-resilient technologies and boosting climate finance for MSMEs.
Impact of FMAP
The FMAP program is expected to significantly reduce greenhouse gas (GHG) emissions by 35.3 million tonnes. Additionally, the adaptation activities will lead to substantial water savings and build resilience for vulnerable communities, benefiting over 10.8 million people. The program also encourages greater participation of women in all its activities.
