Small Industries Development Bank of India (SIDBI) and AFD, France have signed a $100 million credit facility agreement to scale up green finance solutions for Indian micro, small, and medium enterprises (MSMEs), according to a SIDBI statement issued on Wednesday.

The partnership aims to support sustainable growth and drive the transition towards a low-carbon economy.

Under this agreement, AFD will provide a credit line of $100 million to SIDBI to deploy the funds to expand access to affordable financing for MSMEs investing in energy-efficient technologies, renewable energy solutions, and climate-friendly business practices.

This initiative aligns with both institutions’ commitment to fostering sustainable economic development and enhancing climate resilience in emerging markets. The partnership leverages AFD’s global leadership in climate financing space and SIDBI’s understanding of the MSME ecosystem, the statement said.

Lise Breuil, AFD’s country director for India, stated: “At AFD, we are proud to support India’s transition towards a greener and more resilient economy. The $100 million credit line signed with SIDBI marks a crucial step in empowering MSMEs to invest in sustainable solutions. MSMEs have to play a major role in India's commitment to achieving carbon neutrality by 2070.”

“This initiative also complements our work on the Greening Indian Financial System (GIFS) Platform, which focuses on integrating sustainability and a climate perspective into Indian Financial Stakeholders strategies – starting with development of finance institutions in the public sector.”

SIDBI Chairman Manoj Mittal said: “This partnership marks a significant step towards India’s national Net Zero commitments. This collaboration gives a fillip to our shared vision of a greener, more inclusive, responsive and enterprising economy.”

“The partnership underscores the growing importance of sustainable finance in driving inclusive economic growth. By leveraging this credit facility, SIDBI aims to provide long-term financial solutions that enable MSMEs to adopt cleaner technologies, improve energy efficiency, and reduce their carbon footprint.”