Mumbai: The Small Industries Development Bank of India (SIDBI), the country’s principal financial institution for MSMEs, has unveiled Mission 50K-EV4ECO, which prioritizes the development of the EV ecosystem. This is the experimental phase to strengthen the EV ecosystem through direct and indirect lending for 2-w, 3-w, and 4-w vehicles.
A detailed engagement with stakeholders highlighted that access to necessary finance, particularly competitive interest rates, is a barrier for MSMEs as well as NBFCs serving the EV ecosystem. Bankers on the supply side viewed these initiatives as high risk.
Similarly, specialist NBFCs have significant funding costs, resulting in a high landed acquisition cost for the final beneficiary. There is also a need to promote the 3-wheeler EV category. Mission 50K intends to address these issues.
Shri Sivasubramanian Ramann, CMD, SIDBI said, “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. MSMEs, aggregators, and other crucial actors of the EV value chain have been facing challenges in convincing financial institutions to lend them. Similarly, the channelizing agencies are also facing speed breakers. NBFCs are playing 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 understand the local ecosystem. Electric vehicle financing is predominantly being done by small/ unrated NBFCs. These NBFCs have good knowledge of the EV sector. At present, it is not possible for these NBFCs to cater to all MSMEs requiring financing for an electric vehicle for their day-to-day operations or commercial use. We at SIDBI realize the need to give it a developmental push thus giving a fillip to the national agenda of Carbon neutral nation.”
Shri Sudhendu Sinha, Adviser (Infra & e-mobility), NITI Aayog said, “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 decarbonization. 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. 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 shall enable quick replicability and scalability through multilateral support. With a 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.”
SIDBIs Mission 50K-EV4ECO, guided by NITI Aayog, DFS, MoF, and GoI, aims to unlock the market by providing better financing terms and understanding additional solution bouquets required to address the aforementioned concerns. This initiative is the forerunner to the SIDBI-World Bank’s EVOLVE scheme.
The pilot project is divided into two parts: direct lending and indirect lending. SIDBI will provide direct credit to qualifying MSMEs (including aggregators, fleet operators, and EV leasing companies) for the acquisition of electric vehicles as well as the development of charging infrastructure, including battery swapping. The indirect program, which is aimed at NBFCs (particularly small unrated/focused/emerging NBFCs actively engaged in EV financing), will reach out to the last mile by facilitating access to finance and lowering landed costs.
