Kinara Capital Study Reveals MSMEs Show Strong Sustainability Intent but Low Awareness of Financing Avenues

Bengaluru, October 4: Kinara Capital’s 5th edition of MSME Insights has revealed a significant awareness gap in sustainable financing, with nearly 73% of India’s micro, small and medium enterprises (MSMEs) unaware of available green financing solutions. Despite this, the study underscores a strong willingness among entrepreneurs to adopt eco-friendly practices, provided they receive the right guidance and resources.

The report, based on a survey of 3,649 MSMEs across 100+ cities in seven states and Puducherry, found that over half (51.7%) of those who applied for green loans successfully secured funding, reflecting strong credit readiness in the sector. Moreover, 74.2% of MSMEs seeking financing within the next year plan to invest in making their operations more sustainable.

Solar products and rooftop solutions emerged as the most popular choice (32.4%), followed by electric vehicles (27.7%) and energy-efficient machinery (19.3%). Interestingly, trading MSMEs outpaced manufacturers in green ambition, with 55.2% expressing intent to access green financing for operations.

Regionally, Tamil Nadu and Puducherry led adoption intent at 37.5%, followed by Andhra Pradesh and Telangana (31.6%), and Karnataka (22.1%). Gujarat and Maharashtra showed lower interest at 8.8%. Sub-sectors like consumables trading and metal-related manufacturing were identified as frontrunners in the green transition.

Hardika Shah, Founder & CEO of Kinara Capital, stressed the sector’s centrality to India’s climate goals: “India’s ambitious Net Zero target by 2070 cannot be achieved without placing MSMEs at the heart of its climate strategy. Focused awareness campaigns and technology-led solutions are essential to bridge the green financing gap.”

The report also highlighted that nearly half (46.7%) of MSMEs accessing green financing prefer NBFCs or fintech lenders, underlining a shift toward agile, technology-driven financial providers.