Mobilising Electric Vehicle Financing in India

NITI Aayog and Rocky Mountain Institute (RMI) India released a new report ‘Mobilising Electric Vehicle Financing in India’, which highlights the role of finance in India’s transition to electric vehicles (EVs) and analyses that the transition will require a cumulative capital investment of USD 266 billion (Rs 19.7 lakh crore) in EVs, charging infrastructure, and batteries over the next decade.
The report also identifies a market size of USD 50 billion (Rs 3.7 lakh crore) for the financing of EVs in 2030—about 80% of the current size of India’s retail vehicle finance industry, worth USD 60 billion (Rs 4.5 lakh crore) today.
India’s EV ecosystem has thus far focused on overcoming adoption hurdles associated with technology cost, infrastructure availability, and consumer behaviour.
Financing is the next critical barrier that needs to be addressed to accelerate India’s electric mobility transition.
To address these challenges, NITI Aayog and RMI have identified a toolkit of 10 solutions that financial institutions such as banks and non-banking financial companies (NBFCs), as well as the industry and government, can adopt in catalysing the required capital.
The 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.
Recommendations beyond finance include digital lending, business model innovation, fleet and aggregator electrification targets, and the creation of an open data repository for EVs.
The report further determines that investment in India’s transition to electric mobility has the potential to create significant economic, social, and environmental benefits for the country.
As the economics of EVs continue to improve, new business models and financing instruments gain acceptance, and government programmes drive early adoption and promote domestic manufacturing, India’s EV market is poised for growth in the coming decade.

Source: PIB

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