NITI Aayog along with Rocky Mountain Institute (RMI) India released the ‘Mobilising Finance for EVs in India: A Toolkit of Solutions to Mitigate Risks and Address Market Barriers’ report. The report analyses the risk & market barriers involved in transforming India’s Electric Vehicle (EV) Sector and provides Target Instruments to overcome the hurdles.
i.Indian EV market size to be of USD 50 billion (Rs 3.7 lakh crore) by 2030, which is equivalent to 80% of the current market size of India’s retail vehicle Finance Industry at USD 60 billion (Rs 4.5 lakh crore).
ii.To achieve the targeted transformation, there needs to be a capital investment of USD 266 billion (Rs 19.7 lakh crore) in EVs, charging infrastructure, and batteries by 2030.
- Re-engineering vehicle finance and mobilising public and private capital will be critical to accelerating the deployment of the 50 million EVs that could be plying on India’s roads by 2030
iii.Identified Hurdles for Transformation – Technology cost, Infrastructure availability, and Consumer behaviour.
Key Target Instruments:
- Priority sector lending (PSL)
- Interest rate subvention
- Product guarantees and warranties
- Risk-sharing mechanism (government and multilateral-led)
- Risk-sharing mechanism (fleet operator-led)
- Secondary market development
Note- At Present, 10 states have notified EV policies, while 6 others are drafting one.
- The Department of Heavy Industry (DHI) and NITI Aayog have recommended India’s State Transport Undertakings (STUs) to deploy 5,595 e-buses under FAME II via a Gross Cost Contract (GCC).
- 10 solutions recommended in the report include financial instruments such as priority-sector lending and interest-rate subvention. Others are related to creating better partnerships between OEMs and financial institutions by providing product guarantees and warranties. Furthermore, a developed and formal secondary market can improve the resale value of EVs and improve their bankability.
The public and private sectors are diligently working together on solutions to each of these barriers. These solutions include:
• Production-Linked Incentive (PLI) Scheme, with an outlay of INR18,100 crore (USD2.4 billion) for the Advanced Chemistry Cell battery sector.
• Faster Adoption and Manufacturing of Electric Vehicles (FAME) India Scheme, Phase II with an outlay of INR1,000 crore (USD135 million) for the deployment of charging infrastructure.
Some Government Interventions:
i.In 2015, DHI, launched its flagship incentive programme, the FAME India Scheme, to accelerate EV adoption.
ii.FAME II began in April 2019, with an outlay of INR10,000 crore towards EV adaptation & Infrastructure development.
iii.GST on EVs sold with batteries was reduced from 12 to 5%.
Some Bank initiatives:
i.SBI started the Green Car Loan, for buying electric cars.
ii.IndusInd Bank offers retail vehicle finance for 3-wheeler electric Vehicles.
Recent Related News:
Power Minister RK Singh launched India’s 1st public EV Charging Plaza in New Delhi & RAISE initiative
About Rocky Mountain Institute (RMI):
RMI is an US based Not for Profit Organisation founded in 1982.
Function – It works on Transforming the global energy sector to create a clean, prosperous & Zero-Carbon Future.
Headquarters – Colorado, USA
Managing Director – Jon Creyts
About NITI Aayog:
National Institution for Transforming India (NITI Aayog) the premier policy ‘Think Tank’ of the Government of India was established on 1st January 2015.
It replaced the Planning Commission of India (established in 1950).
Chairperson – Prime Minister of India
Chief Executive Officer – Amitabh Kanta
Vice Chairman – Rajiv Kumar