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Small Industries Development Bank of India (SIDBI) has announced the launch of a pilot scheme for better financing terms in the electric vehicle space and strengthening the whole ecosystem.

The pilot phase of ‘Mission 50K-EV4ECO’ aims at strengthening the EV ecosystem, including uptake for two, three and four-wheelers through direct and indirect lending, Small Industries Development Bank of India (SIDBI) said in a statement.

The pilot scheme, which is the precursor to EVOLVE scheme by SIDBI-World Bank, has two components—direct lending and indirect lending.

This pilot will be followed by scaling up support to the ecosystem from multilateral support, it stated.

A detailed discussion with stakeholders revealed that access to adequate finance, including the competitive rate of interest, is a challenge faced by MSMEs (Micro, Small and Medium Enterprises) and NBFCs, catering to the EV ecosystem, SIDBI said. It also said that on the supply side, bankers perceived these projects as high risk.

Similarly, dedicated NBFCs (non-banking finance companies) struggle with the high cost of funds, which leads to the landed acquisition cost to the ultimate beneficiary being high. Also, there is a need to push the three-wheelers EV segment and Mission 50K intends to attend to these challenges, it said.

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

The indirect scheme targeted at NBFCs, including small unrated focused and emerging NBFCs, actively engaged in EV financing, will reach out to the last mile by inducing access to funds as also reducing landed cost, it said.