A huge untapped manufacturing base that by and large remains unaccounted for are the very small unorganised players in states like West Bengal, Uttar Pradesh, Haryana, Karnataka etc churning out huge highly toxic quantities of both apparel and footwear. Any thoughts to address this segment, because without addressing them all moves to combat climate change will remain hogwash.
Lewis Perkins: AII and DFI efforts took a closer focus on Tamil Nadu as one of the regions with higher concentration of facilities. However, the majority of the funds and credit lines identified (e.g. SIDBI EE Loans and ADB Solar Rooftop Investment Program) are nationwide in scope, while a few are state-specific. Thus, facilities in West Bengal, Uttar Pradesh, Haryana, Karnataka and others have significant options to tap into funding available.
The report also found that some states are taking proactive steps to support an enabling environment more conducive towards decarbonisation as they are using that ambition as a comparative advantage to support local manufacturing and exports. While the financing is available, it is up to the facilities, and potential support by state entities to ensure uptake of these resources.
The report does acknowledge the above — Another major barrier is inadequate literacy and financial literacy, especially in rural areas where many manufacturers are situated. Many application processes are complicated and lengthy, adding further difficulty for applying manufacturers right from the onset. Strong hand-holding is necessary to guide them through navigating the forms and transaction processes to secure resources — how can financing agencies etc support this hand-holding?
Lewis Perkins: One of our key recommendations is to shift the risk perceptions of green investments and investments into MSMEs. High-risk perceptions play a part in shaping the terms and processes involved with accessing relevant financing. We are calling for financiers to take initiative and inform themselves of real-life cases of successful ROIs, adapt their perceptions and application/screening processes, and invest in these areas with reasonable terms for borrowers. To support this shift, we’re planning to develop a sustainable financing training and capacity-building programme, set to roll out in 2025, which will target suppliers in the greatest need of financing, using our playbook as a guide. This programme could also be extended to financial institutions to further align perceptions and processes, if required.
Again, as the report rightly points out: “There is a gap in awareness of green financing options among smaller manufacturers. This information asymmetry puts options out of reach. There is a tendency for lending institutions to favour larger, more established enterprises for their credibility. As such, they do not exert huge efforts to market their options to smaller MSMEs, which are in more need of their financing support.” — What could be the roadmap to reach the finances where required. And before that, sensitisation on the need to go green is more critical.
Lewis Perkins: Part of AII’s work is to bring together stakeholders from across the value chain—including financiers, brands, factories, government agencies, and technical experts—to engage in open discussions about the industry’s current challenges and realistic pathways forward. By convening these key players, AII aims to facilitate a space for candid conversations that bridge information gaps, encourage shared learning, and promote collaboration on financing and decarbonisation needs.
AII also heavily involves itself in thought leadership through reports, guides, podcasts, and roundtables to spread awareness of the need to go green and the cost of inaction.
