NEW DELHI: After rolling out policy initiatives to develop India as a hub for lithium-ion cells manufacturing, the Indian government is functioning on ensuring the supply of affordable credit to the nascent electric vehicle industry.
Government’s policy thinks tank, Niti Aayog has been performing on a series of policy measures to form sure banks and financial institutions offer credit at affordable rates to buyers of electric vehicles and straightforward availability of finance for projects associated with development and manufacturing of such zero-emission vehicles.
The World Bank Group has been assisting the govt in formulating these policy measures, said two people directly conscious of the event. at the present availability of finance is taken into account a key hurdle for sales and other aspects of the electric vehicle industry.
According to the primary person mentioned above, the Niti Aayog cares about the shortage of finance options available for patrons of electrical two and three-wheelers which consistent with senior officials will get most of the traction within the next few years.
“Today the rate of interest on a combustion engine vehicle is 10-14% counting on the bank and therefore the customer. an equivalent for an electrical vehicle is around 20-25% and therefore the senior officials in Niti Aayog and the government want to make an enabling environment for the supply of finance for these vehicles. Subsequently, they’re going to also check out the supply of finance for projects associated with EVs,” said the person requesting anonymity.
In its effort to scale back vehicular emissions and petroleum imports, the Narendra Modi government has been urging vehicle manufacturers to develop and make electric vehicles in India. It had also earmarked ₹10000 crores as subsidy under the Faster Adoption and Manufacturing of electrical al and Hybrid vehicle (FAME) scheme in 2019 to market sales of electric vehicles and fixing of related infrastructure like charging stations.
On November 11, the govt announced the assembly linked incentive program worth ₹18,000 crores to market lithium-ion cell manufacturing in India.
“Presently, electric vehicles don’t have a strong resale market, which makes it difficult for banks to determine their residual value. This results in a better cost of financing for electric vehicles compared to their ICE counterparts,” a spokesperson of Niti Aayog said in response to an email query on Wednesday.
He further added that Niti Aayog has received a proposal from International Bank for Reconstruction and Development to undertake a couple of steps to ease access to finance for electric vehicle buyers. The proposal is at a really preliminary stage of dialogue.
The electric vehicle industry is during a nascent stage and has not managed to realize any traction within the domestic market thanks to the high difference in prices with combustion engine vehicles, lack of charging station and absence of local manufacturing. within the last two years, automakers and startups within the three and two-wheeler space have launched a slew of products expecting demand to select up within the next few years.
Manufacturing of crucial components like lithium cells, batteries, electric motors has also not picked up in India thanks to the low volumes within the domestic market. consistent with a study conducted by Association of Automotive Component Manufacturers (ACMA) and consultancy firm, Roland Berger, electric two-wheelers will form 34.5% of the entire two-wheeler sales in India by 2025.
According to the person mentioned above, availability of credit is a crucial issue for any new industry and therefore the Niti Aayog is going to be working with International Bank for Reconstruction and Development to know how banks and other financial institutions can lend to EV customers.
“The aim is to interact with the banks and obtain affordable credit for this industry, which is critical for the event of the world. Also, they’re going to check out how the govt can contribute to assist create a conducive environment for financing electric vehicles. After the PLI scheme, this measure was needed since EV makers have mentioned lack of affordable finance options together of the explanations why EV sales aren’t learning,” added the person requesting to not be named.