Credit and finance for MSMEs: MSMEs finding it difficult to access loans to purchase electric vehicles (EVs) for their day-to-day operations and commercial use will now be able to access credit directly from SIDBI, the principal financial institution for MSMEs in India. As per a pilot scheme Mission 50,000-EV4ECO announced under guidance from NITI Aayog, SIDBI has said that it will directly give loans to eligible MSMEs (including EV fleet operators, EV leasing companies and aggregators) to buy EVs including two-wheelers, three-wheelers and four-wheelers and also to develop charging infrastructure including battery swapping.

According to SIDBI, a detailed discussion with stakeholders revealed that access to adequate finance including a competitive rate of interest is a challenge faced by MSMEs in buying EVs and also by NBFCs catering to the EV ecosystem.

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Sivasubramanian Ramann, CMD, SIDBI said in a statement on April 14 “MSMEs, aggregators and other crucial actors of EV value chain have been facing challenges in convincing financial institutions to lend them. Similarly, the channelising agencies are also facing speed breakers…EV 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.” 

Hence, under the scheme, SIDBI will indirectly lend to NBFCs (including small unrated/ focused /emerging NBFCs actively engaged in EV financing) also to reach out to the last mile and also reduce the landed cost.

Supporting the acquisition of two and three-wheelers is important due to their cost competitiveness also. Sudhendu Sinha, Adviser (Infra & e-mobility), NITI Aayog said the transition to EVs is a critical cornerstone for transport sector decarbonization.

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“Electric 2/3 wheelers (e-2/3Ws) offer the greatest potential for EV adoption in India, accounting for 79 per cent of passenger road activity, and are already cost-competitive relative to conventional vehicles. To support India’s commitment to EV30@30, SIDBI taking lead in launching the Mission50K-EV4ECO scheme is a step in the right direction,” said Sinha. 

EV sales in India had crossed the 1 million mark in FY23 with 11,52,021 units sold, up 58 per cent from 7,26,861 units sold in FY22, according to the Society of Manufacturers of Electric Vehicles (SMEV). Two-wheelers had the highest share of 62 per cent with 7,26,976 units sold in FY23.

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