Tailoring Blended Finance to the Local Context to Support SDG-7

The Indian government places high priority on the micro, small, and medium enterprises (MSME) sector because of its significance in alleviating poverty. Its goal is to raise the sector’s share of the GDP to 50 percent and create jobs for at least 150 million people. However, the MSME sector faces several challenges, such as supportive infrastructural gaps related to energy provisioning, especially clean energy. Limited access to credit for technology upgradation and absorptive capacity further constrain any efforts to make the transition to energy-efficient, low-carbon power sources for increased incomes. Mobilising finances from unitary sources becomes a challenge, impeding the functioning and growth of the sector. This policy brief outlines potential approaches and innovations by considering a few examples where some of the localised actions could offer insight on larger policy objectives and potentially increase alternative reliable financial support for the MSME sector.