Small Industries Development Bank of India (SIDBI) has introduced Mission 50K-EV4ECO to prioritize EV ecosystem development.
This is the pilot phase to strengthen the EV ecosystem including uptake for 2-w, 3-w, and 4-w through direct and indirect lending.
A detailed discussion with stakeholders has revealed that access to adequate finance including the competitive rate of interest is a challenge faced by MSMEs as also NBFCs, catering to the EV ecosystem.
On the supply side banker perceived these projects as high risk. Similarly, dedicated NBFCs struggle with the high cost of funds which leads to the landed acquisition cost to the ultimate beneficiary being high. Also, there is a need to push the 3-wheeler EV segment. Mission 50K intends to attend to these challenges.
Sivasubramanian Ramann, CMD, SIDBI said, “In line with the national mission of EV30@30 SIDBI has adopted EV as a priority, and by launching mission 50K- EV4ECO we intend to promote the entire EV value chain. This pilot shall be followed by scaling up support to the ecosystem from multilateral support. MSMEs, aggregators, and other crucial actors of the EV value chain have been facing challenges in convincing financial institutions to lend them. Similarly, the channelizing agencies are also facing speed breakers. NBFCs are playing an important role in the enterprise growth strategy of SIDBI. They have shown willingness and ability to reach the bottom of the pyramid businesses, especially in credit-deficient geographies, adoption of innovative and nimble credit delivery models, and understanding of the local ecosystem. Electric vehicle financing is predominantly being done by small/ unrated NBFCs. These NBFCs have good knowledge of the EV sector. At present, these NBFCs can’t cater to all MSMEs requiring financing for an electric vehicle for their day-to-day operations or commercial use. We at SIDBI realize the need to give it a developmental push thus giving a fillip to the national agenda of Carbon neutral nation.”
Sudhendu Sinha, Adviser (Infra & e-mobility), NITI Aayog said, “India has set an ambitious climate change mitigation target and has committed to low-carbon growth in the energy and transport sectors. The transition to electric vehicles (EVs) is a critical cornerstone for the transport sector’s decarbonization. Electric 2/3 wheelers (e-2/3Ws) offer the greatest potential for EV adoption in India, accounting for 79% of passenger road activity, and are already cost-competitive relative to conventional vehicles. To support India’s commitment to EV30@30, SIDBI taking lead in launching the Mission50K-EV4ECO scheme is a step in the right direction. This shall enable access to affordable financing for electric vehicles. We look at SIDBI to prioritize the 3-wheeler segment. I am sure these feet-on-ground pilots shall enable quick replicability and scalability through multilateral support. With a special scheme for NBFCs, I am confident that the mission shall kindle the appetite of BHARAT i.e rural India to start its EV transition journey.”
Under the guidance of NITI Aayog, DFS, MoF and GoI, SIDBIs Mission 50K-EV4ECO intends to unlock the market by providing better financing terms and to understand other solution bouquet needed to address the above issues. This scheme is the precursor to EVOLVE scheme by SIDBI-World Bank.
The pilot scheme has two components- Direct lending and Indirect lending. Under direct lending, SIDBI will directly give loans to eligible MSMEs (including aggregators, fleet operators, and EV leasing companies) for the purchase of electric vehicles and develop charging infrastructure including battery swapping.
The Indirect scheme targeted at NBFCs (including small unrated/ focused /emerging NBFCs actively engaged in EV financing) shall reach out to the last mile by inducing access to funds and also reducing landed costs.
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