Potential for electrifying Indian MSMEs

Switching to electricity-based systems can conserve energy and reduce carbon emissions among MSMEs

The Indian industry, which consumes around 50% of total energy demand (MoSPI, 2020), is yet to see a clear path towards emissions reduction across all industrial sub-sectors. Industry is challenging to decarbonise for three main reasons: need for high temperature heat processes, use of fossil-fuel-based chemical feedstocks, and the presence of process emissions. Based on a TERI analysis, nearly two-third of the total energy consumption in Indian industry today is primarily for meeting the direct heat requirements in various processes. Nonetheless, there are many 'low-hanging fruits' in Indian industry, where processes can be electrified and where technologies are generally available and a switchover to electricity-based systems can save both energy and emissions in the immediate term. This is particularly the case in many Micro, Small and Medium Enterprises (MSMEs) which form the backbone of the Indian industry sector.

This discussion paper assesses the potential of electrification in selected MSMEs sub-sector, identifies barriers limiting the rate of electrification among MSMEs, and provides recommendations to overcome these barriers.