The initiative will enable MSMEs and NBFCs to secure financing to purchase EVs
The development of the electric vehicle ecosystem is given priority after the Small Industries Development Bank of India (SIDBI), the nation's primary lending institution for MSMEs, established Mission 50K-EV4ECO. 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 thorough engagement with stakeholders has revealed that MSMEs and NBFCs serving the EV ecosystem both struggle to secure sufficient financing, including loans with competitive interest rates. Bankers viewed these projects as high risk on the supply side. The high cost of capital also causes the landed acquisition cost to the final beneficiary to be high for committed NBFCs. Moreover, the EV segment for three-wheelers has to be promoted. Mission 50K intends to address these issues.
This programme serves as a model for the SIDBI-World Bank's EVOLVE programme. Both direct lending and indirect lending are included in the pilot programme. SIDBI will provide loans to qualified MSME's (including aggregators, fleet operators, and EV leasing companies) directly under the direct financing programme in order for them to purchase electric vehicles and build charging infrastructure that includes battery swapping. By facilitating access to capital and lowering landed costs, the indirect programme aimed at NBFCs (particularly small, unrated, focused, and emerging NBFCs actively engaged in EV finance) will reach out to the final mile.
Sivasubramanian Ramann, CMD, SIDBI said, “This pilot shall be followed by scaling up support to the ecosystem from multilateral support. MSMEs, aggregators, and other crucial actors in the EV value chain have been facing challenges in convincing financial institutions to lend them. Similarly, the channelising agencies are also facing speed breakers.”
He emphaises that NBFCs (non-banking financial companies) are well-versed in the EV market. “Now, these NBFCs are unable to provide all MSMEs in need of finance for an electric car for their daily operations or commercial use. We at SIDBI understand that it needs to be given a developmental boost in order to support the national aim of being a carbon-neutral nation,” he adds.
In view of India’s net-zero targets and growing concern for climate change, it is a significant development. Transition to EV can be a critical step towards decarbonisation.
Sudhendu Sinha, Adviser (Infra & e-mobility), NITI Aayog noted, “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 will enable quick replicability and scalability through multilateral support. With 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.”