Navigating the Energy Conundrum: A Strategic Imperative for MSMEs This financial pressure restricts MSMEs from adopting advanced technologies or scaling their operations, ultimately affecting their market position and competitiveness. In response to this pressing challenge, MSMEs can explore several strategies to enhance energy efficiency and reduce costs.
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Micro, Small, and Medium Enterprises (MSMEs) uphold the economies worldwide, contributing significantly to employment, innovation, and GDP. However, one of their most pressing challenges today lies in the realm of energy costs. Rising electricity expenses are eroding profit margins in energy-intensive industries like refrigeration, manufacturing, and processing, making energy management not just a financial concern but a strategic imperative.
High electricity expenses are a persistent hurdle for businesses in energy-dependent sectors. Chandrakant Patel, managing director of Ice Make Refrigeration Ltd, highlights the gravity of this issue. "For businesses like ours, where energy costs account for a substantial portion of operational expenses, rising electricity prices directly impact profitability, reducing margins and hindering reinvestment in growth, innovation, or research and development. These constraints can weaken long-term competitiveness, making energy management critical for sustained growth," he said.
This financial pressure restricts MSMEs from adopting advanced technologies or scaling their operations, ultimately affecting their market position and competitiveness. In response to this pressing challenge, MSMEs can explore several strategies to enhance energy efficiency and reduce costs.
Energy audits can identify inefficiencies in current processes and pinpoint opportunities for optimization. Equipment upgrades and process improvements often emerge as quick wins in reducing energy consumption.
"Investing in energy-efficient equipment and adopting automation or AI-driven technologies can optimize energy use while maintaining productivity. Process streamlining, such as better load management and minimizing idle time for machinery, can also significantly reduce energy wastage," Patel advised.
Alternative energy sources like solar panels, wind turbines, or biomass systems offer long-term cost savings. As Patel notes, adopting renewables can help MSMEs "Lower dependence on expensive electricity grids and achieve greater energy independence." However, barriers such as high upfront costs and limited technical expertise must be addressed through innovative financing models and government incentives.
A phased approach to upgrading energy systems ensures gradual adoption without overwhelming financial resources. Collaborations with energy solution providers and financial institutions can further streamline this transition, providing MSMEs with the tools and expertise they need.
Government initiatives
To support MSMEs in their energy management journey, the government has introduced targeted initiatives. The MSE-SPICE (Sustainable, Productive, Inclusive, Competitive Enterprises) Scheme is one such program. With a 25 per cent capital subsidy for adopting resource-efficient technologies and a budget of INR 472.5 crore (2023–2027), MSE-SPICE aims to lower the financial barriers hindering sustainability adoption. This scheme empowers MSMEs to reduce waste and emissions, optimize resource utilization, and transition to low-impact technologies.
India's finance minister, Nirmala Sitharaman, also announced financial support for MSMEs in her speech during this year's budget revelation. "An investment-grade energy audit of traditional micro and small industries in 60 clusters, including brass and ceramic, will be facilitated. Financial support will be provided for shifting them to cleaner forms of energy and implementation of energy efficiency measures. The scheme will be replicated in another 100 clusters in the next phase," she said.
A sustainable alternative
In addition to technological upgrades, MSMEs can explore infrastructure solutions like Pre-Engineered Buildings (PEBs). "PEB technologies streamline construction processes, significantly reducing project timelines and costs, which are crucial pain points for MSMEs. These structures are not only durable and customizable but also align with sustainability goals, making them ideal for businesses aiming to minimize their environmental impact," Nikhel Bothra, executive director at EPACK Polymers, said in a statement.
Energy efficiency must transcend its traditional role as a cost-saving measure to become a cornerstone of MSMEs' growth strategy. As Patel aptly points out, "Ultimately, energy efficiency should be seen not just as a cost-saving measure but as a strategic pillar for long-term sustainability and competitiveness. By managing energy effectively, MSMEs can maintain profitability, drive innovation, and secure their market position."
Through a combination of government support, industry innovation, and strategic investment, MSMEs can navigate the challenges of rising energy costs while contributing to a more sustainable and resilient industrial landscape.
