MSMEs in EV sector face financing challenges as bankers perceive projects high risk: SIDBI

New Delhi, Apr 14 (KNN) Stakeholders have revealed that access to adequate finance including competitive rate of interest is a challenge face by MSMEs as also NBFCs, catering to EV ecosystem, said Small Industries Development Bank of India (SIDBI).

On supply side banker perceived these projects as high risk. Similarly, dedicated NBFCs struggle with the high cost of funds which leads to the landed acquisition cost to the ultimate beneficiary being high.

The country’s Principal financial institution for MSMEs revealed these insights as it announced Mission 50K-EV4ECO, prioritising EV ecosystem development.

It held a detailed discussion with stakeholders as well as the supply side.

This is pilot phase to strengthen the EV ecosystem including uptake for 2-w, 3-w and 4-w through direct and indirect lending.

Sivasubramanian Ramann, CMD, SIDBI said “In line with national mission of EV30@30, SIDBI has adopted EV as priority and by launching mission 50K- EV4ECO we intend to promote the entire EV value chain.”

“This pilot shall be followed by scaling up support to eco system from multilaterals support. MSMEs, aggregators and other crucial actors of EV value chain have been facing challenges in convincing financial institutions to lend them,” he added.

He further said that similarly, the channelising agencies are also facing speed breakers. NBFCs are playing an important role in the enterprise growth strategy of SIDBI.

“They have shown willingness and ability to reach the bottom of the pyramid businesses, especially in credit deficient geographies, adoption of innovative and nimble credit delivery models and understanding of the local ecosystem,” he said.

Sudhendu Sinha, Adviser (Infra & e-mobility), NITI Aayog said “The transition to electric vehicles (EVs) is a critical cornerstone for transport sector decarbonization. Electric 2/3 wheelers (e-2/3Ws) offer the greatest potential for EV adoption in India, accounting for 79% of passenger road activity, and are already cost-competitive relative to conventional vehicles.”

Under guidance of NITI Aayog, DFS, MoF and GoI, SIDBIs Mission 50K-EV4ECO intends to unlock the market by providing better financing terms and to understand other solution bouquet needed to address the above issues.

This scheme is the precursor to EVOLVE scheme by SIDBI-World Bank. The pilot scheme has two components- Direct lending and Indirect lending.

Under direct lending, SIDBI will directly give loans to eligible MSME’s (including aggregators, fleet operators, EV leasing companies) for the purchase of electric vehicles and develop charging infrastructure including battery swapping.

The Indirect scheme targeted at NBFCs (including small unrated/ focused /emerging NBFCs actively engaged in EV financing) shall reach out to last mile by inducing access to funds as also reducing landed cost.

For more contact nearest SIDBI office or write at gcfv@sidbi.in.   (KNN Bureau)