NITI Aayog report on Electric Vehicles

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NITI Aayog report on Electric Vehicles: Relevance

GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Recently, NITI Aayog, Rocky Mountain Institute (RMI) and RMI India released a new report ‘Banking on Electric Vehicles in India’ which outlines the importance of priority-sector recognition for retail lending in the electric mobility ecosystem.

The report provides considerations and recommendations to inform the inclusion of EVs in the Reserve Bank of India’s (RBI’s) priority-sector lending (PSL) guidelines.
The report says that banks and non-banking financial companies (NBFCs) in India have the potential to achieve an electric vehicle (EV) financing market size of Rs 40,000 crore by 2025 (USD 5 billion) and USD 50 billion by 2030.
However, buyers are unable to access low-interest rates and long loan tenures for EVs as banks are concerned about resale value and product quality.
Priority-sector lending can encourage banks to fast-track India’s transition to EVs and help achieve our 2070 climate goals.

The report has further indicated that electric two-wheelers, three-wheelers, and commercial four-wheelers are early segments to prioritise under PSL.
The report has also suggested that RBI may consider various EV segments and use cases based on five parameters: socio-economic potential, livelihood generation potential, scalability, techno-economic viability, and stakeholder acceptability.
To maximise the impact of the inclusion of EVs, the report also recommends a clear sub-target and penalty mechanism for priority sector lending to renewable energy and EVs.
Furthermore, it suggests recognition of EVs as an infrastructure sub-sector by the Ministry of Finance and the incorporation of EVs as a separate reporting category under the RBI.
Multiprong solutions such as these are needed not only for EV penetration and businesses, but also for the financial sector and India’s 2070 net-zero target.

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