MC EXCLUSIVE MSME-SPICE Scheme to be expanded to include 'greenfield' projects after low uptake

The total outlay of the scheme is around Rs 500 crore, but so far, the total expenditure incurred is merely around Rs 2 crores, according to sources

The central government is likely to expand the ambit of the 'MSME-SPICE' scheme in order to encourage more micro, small and medium enterprises to invest in industry-equipment which promotes green practises and waste reduction, Moneycontrol has learnt.

The MSME-SPICE Scheme (MSME Scheme for Promotion and Investment in Circular Economy), introduced in December 2023, was initially aimed at providing financial incentive, or a subsidy, for only brownfield units.

But now, in the coming days, the government will allow greenfield units to avail the subsidy as well, a senior government official told Moneycontrol. "We wish to encourage more MSMEs to undertake investments, and adopt green practises. The scheme so far has not found much traction."

According to SPICE scheme’s dashboard only six MSMEs have availed incentives under the scheme so far, even as the programme envisages enabling more than 3400 MSEs to adopt Circular Economy (CE) solutions till 2026-27 (the end date of the scheme).

Also, the total outlay of the scheme is around Rs 500 crore, but so far, the total expenditure incurred is merely around Rs 2 crores, according to sources.

"If we give incentives for greenfield units, we hope more MSMEs will buy plant and machinery which would push them to adopt circular machinery and processes," the person said.

The SPICE scheme aims to encourage MSMEs to adopt "circular economy" practices, focusing on sectors like plastic, rubber, and electronics waste management to comply with international environmental goals and improve operational efficiency.

The scheme provides a capital subsidy, through banks and other financial institutions, to help MSMEs with the upfront cost of transitioning to circular processes and technologies. The subsidy is 25% of the cost of plant and machinery purchased, with a maximum amount of Rs 12.5 lakhs per unit.

The scheme is implemented in partnership with the Small Industries Development Bank of India (SIDBI).