FIDC calls for holistic EV financing policy, ₹5,000 cr default guarantee fund

Table of Content


The Finance Industry Development Council (FIDC) has urged the government to implement a comprehensive EV financing strategy combining fiscal incentives, regulatory clarity, and infrastructure development to unlock $50 billion in electric vehicle (EV) financing by 2030. It has called for establishing a dedicated fund with SIDBI or NABARD for financing support to NBFCs.

A collaborative effort is crucial for India to meet its net-zero targets and establish itself as a global leader in the EV sector, Mahesh Thakkar, Director General of FIDC said in a letter to Niti Aayog.

Despite the sector’s potential to drive decarbonization, financing remains a significant challenge. Non-Banking Financial Companies (NBFCs) have emerged as the primary players in EV financing, yet they face numerous hurdles due to the evolving nature of the industry. FIDC stresses that just as the government has supported EV manufacturing through schemes like FAME and PLI, a similar approach is needed for financiers to mitigate risks and boost investment confidence.

Key challenges

EV financing is currently treated the same as internal combustion (IC) vehicle financing, with no special incentives for financiers. Additionally, the absence of standardized assessments for battery life and resale value creates uncertainty in the secondary market, making depreciation risks a concern due to evolving battery technologies and unclear warranties.

Battery-related risks and rapid technological advancements—such as solid-state and sodium-ion batteries—create asset uncertainties, complicating financing. Limited data on battery degradation in Indian conditions exacerbates these concerns.

Inadequate charging infrastructure, particularly in Tier 2 and Tier 3 cities, leads to range anxiety and increases collateral risks for financiers if EVs remain underutilized. Other major challenges include high cost of capital, a lack of clarity on insurance policies—especially for retrofit cases—and low consumer awareness regarding EV performance, maintenance costs, and financing options.

Recommendations

To address these challenges, FIDC has proposed several policy measures. The organization advocates for the establishment of a dedicated fund with SIDBI or NABARD to provide financing support to NBFCs for lending towards EVs. Additionally, it recommends subsidized interest rates, priority sector classification for EV financing, and the creation of a ₹5,000-crore government-backed guarantee fund to cover potential defaults.

FIDC also suggests a collaborative approach between original equipment manufacturers (OEMs) and financiers to standardize used EVs, similar to past initiatives like Maruti True Value and Mahindra First Choice. Establishing a national agency for battery certification and launching EV buyback programs with assured residual values could further enhance the resale market’s viability.

In terms of infrastructure development, FIDC urges the government to fast-track rural and urban charging hubs. Furthermore, legislative amendments to the Motor Vehicles Act should recognize EV batteries as a separate asset class, facilitating financing and leasing opportunities while preventing fraudulent sales.

To ensure long-term sustainability, FIDC calls for the implementation of technology-driven solutions such as a national telematics platform for real-time battery health monitoring.





Source link

AIMPWA

mmkrishnandasu@gmail.com http://msmenews.sbs

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent News

Trending News

Editor's Picks

Kerry Washington invests in wedding marketplace Cheersy

Kerry Washington is expanding her angel investment portfolio, serving as lead investor in the pre-seed round of the wedding marketplace Cheersy.  Cheersy, which was founded in 2024 by Amy Shack Egan, helps couples find day-of service wedding coordinators and has raised a total of $550,000, from other investors including Christina Tosi, the founder of Milk...

Tax changes in budget will increase bank deposits by ₹40,000-45,000 crore: DFS secretary M Nagaraju

The finance ministry expects ₹40,000-45,000 crore to flow into banks as deposits from the various tax changes announced in the Budget, including raising the tax-free income level to ₹12 lakh, financial services secretary M Nagaraju said during a media interaction on various Budget proposals on Monday. Union Budget 2025, which finance minister Nirmala Sitharaman presented...

Tata-Group auto major plans ₹2,000 crore fund raise via NCD issue on THIS date, stock down 12% YTD; Buy or sell?

Tata Motors Ltd announced that its board will meet on Wednesday, March 19, to consider a fund raising proposal up to ₹2,000 crore. The leading manufacturer of domestic and commercial vehicles said the fund raising will be done through the issuance of rated, listed, unsecured, redeemable, Non-Convertible Debentures on a private placement basis. Tata Motors’...

ALL INDIA MSMES PROMOTION AND WELFARE ASSOCIATION

Quick Links

Popular Categories

Must Read

AIMPWA © 2025- All Right Reserved. Designed and Developed by  growGX.com