Tamil Nadu’s MSMEs will face significant carbon hurdles in the upcoming years due to regulations imposed by the European Union penalizing exporting companies based on their carbon footprint. During the MSME panel discussion at the Global Investors Meet in Chennai, Hans Raj Verma, CMD of Tamil Nadu Industrial Investment Corporation (TIIC), highlighted that various regulations will start taking effect from 2026, which will diminish the price competitiveness of Indian suppliers in the global supply chain. Some of these regulations include EU Deforestation Regulation (EUDR) and EU cross border carbon policy, which will impose additional levies on products based on their carbon weight. Verma also mentioned that shipping will be subject to carbon rules, making importing parts from cheaper locations uncompetitive for EU companies.
In response, he emphasized the need for low-cost, home-grown solutions for sustainable productivity among India’s MSME suppliers. TIIC has signed an MoU with IIT Madras to facilitate the adoption of energy-efficient solutions and Industry 4.0 technologies in MSMEs to integrate Tamil Nadu suppliers into the global supply chain.
The MSME industry perceives some of these carbon regulations as unfair trade practices, particularly the calculation of logistics carbon emissions for a carbon tax in the EU. However, with the collaboration between the state government and Tata Technologies to transform 71 industrial training institutes (ITIs) into Industry 4.0 technology centers, MSME units have the opportunity for a quick skill upgrade according to Verma. Moreover, 50-100 MSME units in the Hosur cluster are receiving free training in collaboration with Toyota as part of a hub and spoke model.
M Ponnuswami, co-chair of the CII National MSME Council, stressed the importance of such efforts as exports are vital for margins. He mentioned that a recent MSME delegation visited Dubai and Abu Dhabi, indicating a demand for value addition in export markets with much higher margins than domestic returns.
In response, he emphasized the need for low-cost, home-grown solutions for sustainable productivity among India’s MSME suppliers. TIIC has signed an MoU with IIT Madras to facilitate the adoption of energy-efficient solutions and Industry 4.0 technologies in MSMEs to integrate Tamil Nadu suppliers into the global supply chain.
The MSME industry perceives some of these carbon regulations as unfair trade practices, particularly the calculation of logistics carbon emissions for a carbon tax in the EU. However, with the collaboration between the state government and Tata Technologies to transform 71 industrial training institutes (ITIs) into Industry 4.0 technology centers, MSME units have the opportunity for a quick skill upgrade according to Verma. Moreover, 50-100 MSME units in the Hosur cluster are receiving free training in collaboration with Toyota as part of a hub and spoke model.
M Ponnuswami, co-chair of the CII National MSME Council, stressed the importance of such efforts as exports are vital for margins. He mentioned that a recent MSME delegation visited Dubai and Abu Dhabi, indicating a demand for value addition in export markets with much higher margins than domestic returns.
