FIDC seeks FAME, PLI-like scheme to incentivise EV finance
The Finance Industry Development Council (FIDC) has said they have sought a scheme to incentivise electric vehicle finance in the country on the lines of Faster Adoption & Manufacturing of Electric Vehicles (FAME) or production-linked incentive (PLI) schemes. In a recent meeting with the central government's think tank Niti Aayog, the FIDC said while a shift to electric vehicles is pivotal to achieving decarbonisation goals, EV financing is a bottleneck.
FIDC said just as the government supported and incentivised manufacturing of EVs through FAME and PLI schemes, a similar initiative for the financiers is the need of the hour. It 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.
On the battery front, it said there are rapid technological advancements, which increase asset risks for financiers, while the data on battery degradation in Indian conditions is also limited. It 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.
