Green finance and sustainable growth of Indian SMEs: an analytical study

Small and Medium Enterprises (SMEs) play a crucial role in India’s economic development by contributing significantly to employment generation, industrial output, and exports. However, the growing emphasis on environmental sustainability has highlighted the need for integrating green finance into SME operations. This study examines the significance and role of green finance in promoting sustainable business practices among Indian SMEs. It explores how environmentally responsible financing can enhance competitiveness, innovation, and long-term resilience. The paper also evaluates the major green finance initiatives launched by the SIDBI, RBI and the Government of India, such as green bonds, priority sector lending for renewable energy, and sustainability-linked credit schemes. The findings underline that effective green financial frameworks and institutional support are crucial for fostering sustainable economic growth and achieving India’s broader climate and development goals. Green finance is a strategic tool for achieving sustainable growth, reducing environmental risks, and strengthening the resilience of India’s SME sector in the global sustainability landscape. Ultimately, green finance represents not just a funding mechanism but a strategic pathway for Indian SMEs to achieve long-term resilience, competitiveness, and environmental stewardship.