Climate-related disruptions affecting MSMEs' productivity, operations, supply chains: Report

New Delhi, India's micro, small and medium enterprises (MSMEs) are increasingly exposed to climate-related disruptions, with extreme heat and flooding affecting productivity, operations, supply chains and business resilience, according to a new report.

Despite this, the MSMEs continue to rely predominantly on reactive coping strategies rather than proactive resilience measures, said the report, which is based on a survey of 310 such units across Surat, Chennai and Coimbatore.

The findings are significant because they highlight a major climate-resilience gap among MSMEs, which are the backbone of India's economic landscape, pivotal in employment generation, entrepreneurship promotion and economic development.


The report, titled "Risk and Resilience of Micro, Small and Medium Enterprises to Climate Change: A Vulnerability Assessment in the Manufacturing Sector of Gujarat and Tamil Nadu", was published by the World Resources Institute (WRI) on Thursday.

It said 92 per cent of the surveyed MSMEs reported operational impacts due to heat stress and 78 per cent reported reduced worker productivity due to heat.

On the other hand, floods affect MSMEs not only through direct physical damage but also through disruption to transport and logistics, delays in raw material supply and damage to inventory and machinery etc., the report said.

MSMEs largely rely on short-term flood-coping measures, such as relocating or safeguarding assets, while only 19 per cent have adopted longer-term measures to reduce flood damage.

The report stated that 89 per cent MSMEs rely on basic ventilation systems and only 12 per cent have adopted more effective measures, such as cool roofs or insulation.

In a statement, the WRI said, "The report identifies a significant 'actionability gap', where awareness of climate change is not translating into practical preparedness and resilience measures. This points to a major resilience gap among MSMEs, many of which operate with limited financial buffers and limited access to formal risk management tools."