Indian economy is considered as the future market for the world investors. But this assumption is associated with lots of challenges and limitations. The major growing sectors which support the Indian economy are agriculture, small and medium enterprises (SMEs). SMEs contribute in Indian economy’s GDP next to the agriculture sectors which include all type of industries like cement, steel, textile and handicraft industries etc. In few countries SMEs are the most growing sectors. They contribute lion share to export and provide employment for the people. Because of this reason, in current scenario these industries caught attention of government and investors. As SMEs are growing sectors and possessing lots of opportunities and introduced as the backbone of economy, still faced challenges related to environmental issues. It has to work for reducing the negative impact of environmental issues but for doing this it has to first understand “what these impacts are”. Then get insight to determine these impacts.

In this article we have estimated the environmental impact in India and analyzed the challenges from the Indian legislation, financial institutions and opportunity in environmental business called green products. We have discussed how to transform the environmental challenges into the commercial opportunity. This study formulates an outline for raising the awareness connected to environmental, social, resources and energy issues. It also provides them support to availing facilities from the legislation and encourages enhancing their environmental and energy performance by elevating their skill, qualifications and training. This article focused on the growth sustainability challenges confronting SMEs concerned to environmental and societal impact. These challenges comprise innovation, technologies and research and development for production of commodities in SMEs.