Mumbai: Small Industries Development Bank of India (Sidbi) has announced a new scheme under which it will provide direct finance at competitive rates for the purchase of electric vehicles (EVs) to micro, small and medium enterprises (MSMEs). This would cover vehicle aggregators, fleet operators, and leasing companies. The financial institution will also fund non-banking finance companies (NBFCs) that provide loans for EV purchases and push electrification in the three-wheeler segment.
The direct finance will also be available to those developing charging infrastructure, including battery-swapping. The indirect scheme targeted at NBFCs will reach out to the last mile by inducing access to funds as well as reducing landed costs.
The Sidbi scheme is part of its ‘Mission 50K-EV4ECO’, which prioritises EV ecosystem development. This is currently a pilot phase to strengthen the EV ecosystem, including uptake for 2-wheelers, 3-wheelers, and 4-wheelers through direct and indirect lending.
The scheme was introduced after the institution received feedback that access to adequate finance, including a competitive rate of interest, is a challenge faced by MSMEs as well as NBFCs catering to the EV ecosystem. On the supply side, bankers perceived these projects as high risk. “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,” said Sidbi CMD Sivasubramanian Ramann.
“NBFCs play 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,” Ramann added. According to Niti Aayog adviser (infra & e-mobility) Sudhendu Sinha, 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 decarbonisation.
“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 the lead in launching the Mission50K-EV4ECO scheme is a step in the right direction,” said Sinha.
Niti Aayog, the government’s think tank, also houses the ‘National Mission for Transformative Mobility & Battery Storage’ that is driving e-mobility all over the country.
