In a strategic move to accelerate industrial sustainability and drive higher participation, the Government of India is expanding the scope of the MSME-SPICE Scheme (Scheme for Promotion and Investment in Circular Economy) to include greenfield projects. The decision follows limited uptake from existing businesses since the scheme’s launch in December 2023.
MSME-SPICE was originally designed to promote circular economy practices—such as waste reduction, recycling, reuse, and resource efficiency—among small and medium enterprises. However, the eligibility was earlier restricted to “brownfield” units, i.e., already established firms. The latest inclusion of greenfield projects now opens the door for new businesses investing in eco-friendly and sustainable production systems.
Limited Response Sparks Policy Revision
According to government data, the scheme has witnessed slow progress since inception. Only six MSMEs have availed of incentives so far, a fraction of the target to support 3,400 enterprises by FY 2026-27. Of the ₹500 crore corpus, just about ₹2 crore has been disbursed, prompting a policy rethink.
A senior official told Moneycontrol that allowing new units would likely drive stronger participation. “By bringing greenfield projects into the fold, we expect more MSMEs to adopt sustainable technologies from day one, rather than retrofitting older processes later,” the official said.
Encouraging Circular Economy Through Capital Subsidy
Under MSME-SPICE, enterprises can avail a capital subsidy of up to 25% of the cost of plant and machinery, capped at ₹12.5 lakh per unit. This financial support aims to offset the high upfront investment associated with green technologies and circular manufacturing.
The Small Industries Development Bank of India (SIDBI) serves as the implementing agency for the scheme, overseeing application processing, monitoring, and fund disbursement. With greenfield inclusion, SIDBI expects a rise in proposals from sectors such as renewable materials, waste recycling, packaging innovation, and green manufacturing.
Driving India’s Transition to Sustainable Industry
The government’s revised approach reflects its broader commitment to building a circular and resource-efficient economy. MSMEs play a critical role in this transition, as they account for nearly 40% of India’s manufacturing output but often face barriers in adopting advanced green technologies due to cost and access challenges.
By expanding eligibility, policymakers hope to stimulate fresh investment, promote low-carbon industrialisation, and strengthen India’s leadership in sustainable manufacturing. The move also aligns with India’s goals under the National Resource Efficiency Policy and Mission LiFE (Lifestyle for Environment).
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A Step Toward Long-Term Sustainability
The expansion of MSME-SPICE marks a shift from reactive to proactive sustainability planning. Encouraging new businesses to integrate circular processes from inception can significantly reduce future waste generation and operational inefficiencies.
Industry experts view this revision as a timely boost that will not only enhance environmental outcomes but also improve MSME competitiveness in global supply chains where sustainability compliance is becoming a decisive factor.