Filling the Missing Middle Financing Gap | Scoping Paper, India 2020

This scoping paper provides the basis for the implementation of the collaborative, multi-step process of the SEED Practitioner Labs Climate Finance in India in 2020. India’s vibrant landscape of MSMEs presents a significant opportunity for diversified socio-economic growth. In light of climate change, climate-smart enterprises – offering products and services for climate change adaptation and/or mitigation – are well-positioned to absorb global climate finance flows to create environmental, social and economic impacts in line with India’s climate action objectives. However, climate-smart MSMEs cannot fulfill their full potential as they lack appropriate access to finance to grow and scale their operations resulting in a missing-middle-financing gap.

From challenges to climate finance solutions

The purpose of the multi-step SEED Practitioner Labs Climate Finance – successfully implemented in India, Thailand, Uganda, Ghana and South Africa since 2018 – is to facilitate a hands-on process that results in targeted climate finance solutions, which finance the growth of SMEs that are actively delivering climate change adaptation and mitigation solutions across their value chains.

In identifying opportunities for innovation, this scoping paper will (1) set the scene for climate action in India; (2) identify the role of climate-smart MSMEs for achieving climate change mitigation and adaptation objectives as well as outline the major financing challenges hindering these enterprises from achieving impacts at scale; and, (3) review the status of green-climate finance and SME finance, and the role of various private and public sector actors in delivering tailored financial solutions to Indonesia’s most pressing climate challenges. The scoping paper will close with (4) a brief introduction to the major challenges (and opportunities) to developing climate finance solutions for SMEs during the SEED Practitioner Labs Climate Finance process in India in 2020.

Access the Scoping Paper here.