In the globalized world, the advancement of technologies has increased the contribution of manufacturing sector in the economies. It has also motivated the implementation of technologies in this sector in the developing countries. Economy, technical innovation, global policies, environment, and social well-being of the human resources have become the areas of focus these days. Considering the changing global preferences, authors of the current study emphasize on the fact that sustainability and carbon neutral practices should be the fundamental enablers of the industrial growth. Developed economies are shifting their focus toward countries providing carbon neutral and sustainable manufacturing services. The increasing awareness toward climate change has led to rapid developments in the buying preferences of developed nations. The emphasis on carbon neutral and sustainable manufacturing has put huge pressure on small and medium enterprises (SMEs) to adopt the changes. However, the adoption of Industry 4.0 technologies can help SMEs in achieving the goal of manufacturing with reduced carbon footprints and increased sustainability. It also helps in building a green image of the SMEs in the global market. Reduction in manufacturing lead times, resource optimization, waste reduction, and resource circularity are key challenges faced by the SMEs of developing economies. Thus, the manufacturing SMEs need to adapt and bring changes in manufacturing practices keeping in mind the latest global trends. Authors observed that in the case organization 5–7% of sheet metal stampings rubber and plastic were recycled and reused in the manufacturing of new components in year 2021. In year 2022, about 10% of required material was coming from the recycled and reused components scrap. Continuous improvement in waste minimization measures has led to a reduction of 7–9% of total waste generated in form of sheet metal scrap and faulty part count in year 2023.