India Requires Approximately 20 Trillion Indian Rupees for Transition to Electric Vehicles by 2030 According to NITI Aayog
India's transition to electric mobility has taken a significant step forward with the release of a report titled 'Mobilising Electric Vehicle Financing in India'. The report, jointly published by NITI Aayog and the Rocky Mountain Institute, presents a toolkit of 10 solutions designed to catalyse the required capital for electric vehicles (EVs).
The report identifies financing as the next critical barrier to accelerate India's electric mobility transition. Amitabh Kant, CEO of NITI Aayog, emphasised the need to mobilise capital and finance towards EV assets and infrastructure.
End-users currently face challenges such as high-interest rates, high insurance rates, and low loan-to-value ratios in EV financing. To address these issues, the report recommends digital lending, business model innovation, fleet and aggregator electrification targets, and the creation of an open data repository for EVs.
Clay Stranger, Senior Principal at Rocky Mountain Institute, highlighted the importance of re-engineering vehicle finance to mobilise public and private capital for the deployment of 50 million EVs by 2030.
The report estimates a cumulative capital investment of USD 266 billion (Rs 19.7 lakh crore) in EVs, charging infrastructure, and batteries over the next decade. Randheer Singh, Senior Specialist at NITI Aayog, stated that a developed and formal secondary market can improve the resale value of EVs and make them more bankable.
The report also suggests creating better partnerships between Original Equipment Manufacturers (OEMs) and financial institutions through product guarantees and warranties. Financial instruments such as priority sector lending and interest rate subvention are recommended to accelerate the EV market.
The report predicts a market size of USD 50 billion (Rs 3.7 lakh crore) for the financing of EVs in 2030, which is about 80% of the current size of India's retail vehicle finance industry. However, it does not mention any specific new cumulative capital investment figures or market size predictions for 2030.
The implementation timeline for the recommendations of NITI Aayog and Rocky Mountain Institute varies, with ongoing efforts since 2020. Key Indian government programs supporting early adoption and local manufacturing of electric mobility vehicles and components include the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme and the Production Linked Incentive (PLI) scheme for electric vehicles and batteries.
The report underscores the potential for investment in India's transition to electric mobility to create significant economic, social, and environmental benefits for the country. As the economics of EVs continue to improve, new business models and financing instruments gain acceptance, and government programs drive early adoption and promote domestic manufacturing, India's EV market is poised for growth in the coming decade.
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