The NBFCs have urged the NITI Aayog to implement FAME and PLI-like schemes to incentivize electric vehicle or EV financing in India.
The Finance Industry Development Council (FIDC), the body representing the NBFCs in India, said in a recent meeting with Niti Aayog that a lack of standardized battery assessments and depreciation concerns hampered the shift to electric vehicles and EV financing, and thereby the GOI’s decarbonization goals.
“Just as the government supported and incentivized 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.
According to PTI, the council also proposed a dedicated fund with SIDBI or NABARD to be set up exclusively for funding NBFCs for on-lending to EVs. It pitched for subsidized interest rates through an extension of the interest subvention schemes for EV loans under Rs 10 lakh.
FIDC said that 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 standardized battery life assessment and resale mechanisms, PTI reported.
Apart from that, financiers grapple with depreciation fears due to evolving battery technology and unclear warranties, FIDC said to the NITI Aayog.
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, it said.
