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50,000 EVs for MSMEs

50,000 EVs for MSMEs, MSMEs, EVs, SIDBI, 50K-EV4ECO, Project Evolve, Niti Aayog, World Bank, direct lending, indirect lending, EV30@30, Korean economic development cooperation, NBFC

SIDBI Launch Mission EVOLVE to Finance 50,000 Evs for MSMEs

50,000 EVs for MSMEs, MSMEs, EVs, SIDBI, 50K-EV4ECO, Project Evolve, Niti Aayog, World Bank, direct lending, indirect lending, EV30@30, Korean economic development cooperation, NBFC

The Small Industries Development Bank of India (SIDBI) has partnered with the Niti Aayog, World Bank, Korea-World Bank Partnership Facility, and Korean Economic Development Cooperation Fund to finance 50,000 EVs for MSMEs.

The Evolve (50K-EV4ECO) project aims to provide affordable commercial financing for EVs. The World Bank, Korea-World Bank Partnership Facility, and the Korean Economic Development Cooperation Fund will provide financial assistance, while Niti Aayog will offer technical support.

Mission 50K-EV4ECO provides loans directly to eligible MSMEs, including EV fleet operators, EV leasing companies, and aggregators, to buy electric vehicles (EVs) such as two-wheelers, three-wheelers, and four-wheelers, and also to develop charging infrastructure, including battery swapping.

Two financing schemes for MSMEs and NBFCs

The bank has introduced two financing schemes, enabling them to provide financing at lower costs.

  • Direct lending
  • Indirect lending

50,000 EVs for MSMEs, MSMEs, EVs, SIDBI, 50K-EV4ECO, Project Evolve, Niti Aayog, World Bank, direct lending, indirect lending, EV30@30, Korean economic development cooperation, NBFC

In direct lending, SIDBI will provide loans directly to eligible MSMEs, aggregators, fleet operators, and EV leasing companies for the purchase of electric vehicles and the development of charging infrastructure, including battery swapping.

The indirect lending component will focus on NBFCs, which include small unrated focused, and emerging NBFCs that are actively engaged in EV financing. The aim is to provide access to funds and reduce the landed cost of EVs.

Challenges faced by MSMEs for purchasing EVs

MSMEs face several challenges when purchasing electric vehicles (EVs). Here are some of them:

  • Access to finance: MSMEs find it difficult to access loans to purchase EVs for their day-to-day operations and commercial use. Due to both perceived and real risks associated with the asset and business model, banks and non-banking finance companies (NBFCs) are hesitant to lend for electric vehicles (EVs).
  • Higher purchase price: EVs are typically more expensive than conventional vehicles (CVs), which increases consumer resistance to purchasing EVs.
  • Limited availability: EVs still share a small niche of the market and are still in the early stages of adoption. Availability improves consumers’ decisions towards purchasing EVs.
  • Component supply issues: SMEs are more vulnerable to component supply issues than large companies as they don’t have the same buying power.
  • Lack of charging infrastructure: EVs require charging infrastructure, which is still limited in some areas.

Solutions to Solve the MSME’s Challenges in purchasing electric vehicles (EVs)

  • Government incentives: Policies should consider important aspects, such as the development of EV charging infrastructure, higher purchase prices, tax rebates, and subsidies for purchasing EVs.
  • Direct credit from financial institutions: MSMEs can access credit directly from the Small Industries Development Bank of India (SIDBI) to purchase EVs.
  • Mainstreaming financing of EVs: A regulatory measure is needed that can mainstream financing of EVs.
  • Improving component supply: SMEs can work with suppliers to improve component supply and reduce the risk of supply chain disruptions.
  • Developing charging infrastructure: Efforts are being made to develop EV charging infrastructure to support the wider adoption of EVs.

50,000 EVs for MSMEs, MSMEs, EVs, SIDBI, 50K-EV4ECO, Project Evolve, Niti Aayog, World Bank, direct lending, indirect lending, EV30@30, Korean economic development cooperation, NBFC

Sivasubramanian Ramann, CMD, SIDBI announced in a statement that “the aim is to promote the entire EV value chain with the 50K-EV4ECO pilot. After this initial phase, they plan to expand support for the ecosystem through multilateral aid. MSMEs, aggregators, and other important actors in the EV value chain have been struggling to persuade financial institutions to lend them money.”

He acknowledged that the financing of electric vehicles is mainly carried out by small, ungraded NBFCs that have a good understanding of the sector and need to promote its development, thereby supporting the national agenda of achieving carbon neutrality.

NITI Aayog, the world bank & the Korean economic development cooperation on SIDBI Mission Evolve (50K-EV4ECO)

  • Sudhendu Sinha, NITI Aayog’s adviser on infrastructure connectivity, transport, and e-mobility, stated that “The Mission 50K-EV4ECO scheme by SIDBI is a move in the right direction to support India’s pledge to EV30@30. The scheme will provide access to affordable financing for electric vehicles, which is a positive development.”
  • According to Gerald Ollivier, Lead Transport Specialist from the World Bank, “Evolve is intended to create an ecosystem in the mobility sector and support approximately 1.5 million EVs.”
  • Kim Kisang, the chief representative of the Korean economic development cooperation fund, has announced that his government will provide support to the SIDBI programme to address the key barriers to the adoption of EVs and promote knowledge sharing between both countries.

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