NBFC lobby seeks govt incentives for EV financing to overcome bottlenecks
In a recent meeting with the central government's think tank Niti Aayog, the Finance Industry Development Council (FIDC) said while a shift to electric vehicles is pivotal to achieving decarbonisation goals, EV financing is a "bottleneck".
A lobby grouping of non-bank lenders on Tuesday said they have sought a scheme to incentivise electric vehicle finance in the country on the lines of FAME or production-linked incentive (PLI) schemes.
In a recent meeting with the central government's think tank Niti Aayog, the Finance Industry Development Council (FIDC) said while a shift to electric vehicles is pivotal to achieving decarbonisation goals, EV financing is a "bottleneck".
"Just as the government supported and incentivised manufacturing of EVs through FAME (Faster Adoption & Manufacturing of Electric Vehicles) and PLI (production-linked incentives) schemes, a similar initiative for the financiers is the need of the hour," the FIDC said in a memorandum.
They said EV financing is treated similarly to internal combustion engine vehicle financing and there is no incentive for financiers, and added that the challenges also include a lack of standardised battery life assessment and resale mechanisms.
Apart from that, financiers grapple with depreciation fears due to evolving battery technology and unclear warranties, it said.
On the battery front, there are rapid technological advancements, which increase asset risks for financiers, while the data on battery degradation in Indian conditions is also limited, they said.
They proposed that a dedicated fund with SIDBI or NABARD can be set up exclusively for funding NBFCs for on-lending to EVs and also pitched for subsidised interest rates through an extension of the interest subvention schemes for EV loans under Rs 10 lakh.