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SIDBI Announced New Financing Solution For Electric Vehicle Space
The Small Industries Development Bank of India has announced the commencement of a pilot programme to improve electric vehicle financing terms and boost the ecosystem as a whole. The Small Industries Development Bank of India (SIDBI) said in a statement that the pilot phase of "Mission 50K-EV4ECO" intends to develop the EV ecosystem, including uptake for two, three, and four-wheelers through direct and indirect loans.
According to SIDBI, a thorough engagement with stakeholders revealed that MSMEs (Micro, Small and Medium Enterprises) and NBFCs that serve the EV ecosystem encounter difficulties in obtaining appropriate financing, particularly loans with competitive interest rates.
Additionally, it stated that bankers believed these projects to be high risk on the supply side. The high cost of capital also causes dedicated NBFCs (non-banking finance firms) to struggle, which raises the purchase cost for the final recipient.
According to the lender's statement, under direct financing, SIDBI would make loans directly to qualified MSMEs (including aggregators, fleet operators, and EV leasing companies) for the acquisition of electric vehicles.
NBFCs are a key component of SIDBI's enterprise growth strategy. According to Sivasubramanian Ramann, Chairman and Managing Director of SIDBI, they have demonstrated a willingness and capacity to serve firms at the bottom of the pyramid, particularly in areas with a lack of credit.
According to him, SIDBI has made EV a priority in keeping with the national purpose of EV30@30. By launching mission 50K-EV4ECO, we aim to support the whole EV value chain. He added that the channelizing agencies are also encountering speed bumps in their efforts to persuade banking institutions to lend to MSMEs, aggregators, and other significant actors in the EV value chain.
Currently, these NBFCs are unable to provide all MSMEs in need of finance for an electric car for their daily operations or commercial use. We came to see the necessity of giving it a developmental push, which boosted the national aim of a carbon-neutral country, Ramann continued.
India has committed to low-carbon growth in the energy and transportation sectors and has set an ambitious goal for mitigating climate change. According to Sudhendu Sinha, Advisor (infra and e-mobility) at NITI Aayog, the switch to electric vehicles (EVs) is a crucial cornerstone for the decarbonization of the transportation industry.
Given that they make up 79 percent of passenger road traffic in India and are already more affordable than conventional vehicles, electric two- and three-wheelers present the country's best opportunity for EV adoption.
SIDBI taking the lead in introducing the Mission 50K-EV 4 ECO initiative is a move in the right direction to support India's commitment to EV30@30. As a result, Sinha said, EV owners will have access to inexpensive financing.
We look to SIDBI to give the three-wheeler market priority. I have no doubt that these pilots on the ground will facilitate rapid replication and scalability through multilateral support, he continued.
