Outlook Planet C3: Energy Transition Takes a Backseat as MSMEs Focus on Working Capital

Micro, Small, and Medium Enterprises (MSMEs) are not primarily focused on energy transition but rather on their day-to-day working capital, and banks are not ready to support them, experts said during the panel on "Shaping the Future: Leaders in Action" at the Outlook Planet C3 Summit and Awards.

“MSMEs are more focused on their daily business. They first need to ensure their operations are running properly before considering sustainability. For them, sustainability is about whether it helps reduce costs, improves customer engagement, and ultimately provides a return on investment,” said Sanjeev Aggarwal, Founder & Chairman of Hexa Climate, a renewable energy and decarbonization IPP platform.

Aggarwal was joined by Saurabh Kumar, CEO-India of GEAPP, and Raiyaan Shingati, Managing Partner & Co-founder of Transition VC, in a panel discussion on "Energy Independence Through Renewables: Road to Global" Transition, moderated by Outlook Planet Editor Sudipto Dey.

Aggarwal further added that even Hexa Climate, while working on an OPEX model to finance  solar rooftops, tends to avoid working with MSMEs because “banks are not ready to take them as a counterparty.”

GEAPP India CEO Saurabh Kumar echoed these concerns.

“Energy Transition Handled by 18 Ministries”

"Energy transition at the Government of India level is handled by 18 different ministries. This complexity is mirrored down the value chain, whether at the MSME level or in other sectors. If we want an effective and just energy transition, collaboration is essential," Kumar said.

He emphasised the need for harmonisation and cooperation to achieve optimal results. The former Indian Revenue Service officer further asked the Indian government to establish a National Energy Transition Commission, chaired by Prime Minister Narendra Modi and supported by NITI Aayog.

Transition VC’s Raiyaan Shingati noted that, apart from customer push and regulatory requirements, there is little demand from MSMEs for energy transition.

"MSMEs today are focused on working capital finance and solving their existing business challenges rather than prioritising energy transition because it is not their most pressing concern," he said.

He further added that the future lies in startups focusing on profitability, building engineering-driven solutions to real-world problems, and entering manufacturing—an area that investors are particularly interested in.