After announcing policy initiatives to develop India as a hub for lithium-ion cell manufacturing, the govt has been performing on a variety of measures to make sure the supply of affordable credit to the nascent electric vehicle industry.
The government’s policy thinks tank NITI Aayog has been performing on series of measures to make sure banks and financial institutions offer credit at affordable rates to buyers of electric vehicles and straightforward availability of finance for projects associated with the event and production of such zero-emission vehicles.
The World Bank Group has been assisting the govt to formulate these policy measures, said two people directly conscious of the event, seeking anonymity. at the present, the shortage of finance is taken into account a key hurdle to EV sales.
According to the primary person cited above, NITI Aayog cares about the shortage of financing options available for patrons of electrical two- and three-wheelers, which senior officials said will get the foremost 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 EV is 20-25% and senior officials of NITI Aayog and therefore the government want to make an enabling environment for access to credit for these vehicles. Subsequently, they’re going to also check out the supply of finance for projects associated with EVs,” he added.
In its quest to scale back vehicular pollution and petroleum imports, the Narendra Modi government has been urging vehicle manufacturers to develop and manufacturer EVs in India. It had earmarked ₹10,000-crore for the Faster Adoption and Manufacturing of electrical and Hybrid vehicle (FAME) scheme in 2019 to market the sale of EVs and for fixing related infrastructure like charging stations.
On 11th November, the Centre announced a production-linked manufacturing scheme worth ₹18,000 crores to market lithium-ion cell manufacturing in India.
“Currently, electric vehicles don’t have a strong resale market, which makes it difficult for banks to determine their residual value. This results in higher cost of financing for electric vehicles compared to their ICE counterparts,” a NITI Aayog spokesperson said in response to an email query on Wednesday.
He said NITI Aayog has received a proposal from the planet Bank on a couple of steps to supply quick access to finance for EV buyers. The proposal is at a really preliminary stage of dialogue.
The EV industry is during a nascent stage and has not managed to realize traction within the domestic market thanks to their prices, which are above combustion engine vehicles, lack of charging station and absence of local manufacturing. within the last two years, automakers and startups for three- and two-wheelers have launched a slew of products expecting demand to select up.