MSMEs in Tamil Nadu, Gujarat lack action plans to mitigate the impact of climate change

Many SMEs operate with limited financial reserves and have limited access to formal risk management tools. | Photo credit: Siva SaravananS

According to a WRI study, micro, small and medium enterprises (MSMEs) in Gujarat and Tamil Nadu are not prepared for the impacts of climate change.

The report – Risk and Resilience of Micro, Small and Medium Enterprises to Climate Change: A Vulnerability Assessment in the Manufacturing Sector of Gujarat and Tamil Nadu – found that while Indian SMEs are increasingly exposed to climate-related disruptions, there is a “significant gap for action”.

According to the study, which included 310 SMEs in Surat, Chennai and Coimbatore, climate change awareness did not translate into practical preparedness and resilience measures. Many SMEs operated with limited financial reserves and had limited access to formal risk management tools.

Only 13% of SMEs said they have a formal business continuity plan and 21% have contingency funds to deal with climate-related disruptions. Almost 56% of businesses had some form of insurance, although coverage was largely limited to conventional risks such as fire and health insurance. The study found that only 17% had flood insurance.

Workers in 92% of SMEs surveyed reported operational impacts due to heat stress, 78% reported reduced worker productivity due to heat, more than half reported increased worker absenteeism related to heat exposure, and 41% reported heat-related illness among workers.

Thus, heat stress has been found to affect worker health, attendance, productivity and uptime. However, 89% relied on basic ventilation systems and only 12% took effective measures such as cool roofs or insulation.

Similarly, flooding disrupted transportation and logistics, delayed raw material supplies, damaged inventory and machinery, reduced labor availability, disrupted production cycles, led to loss of market access and delivery delays, and increased operational and recovery costs.

These units largely relied on short-term measures to manage floods, such as relocation or securing property, and only 19% took long-term measures to reduce flood damage.

Published – 26 Jun 2026 20:33 IST