The NITI Aayog has suggested including electric vehicles in the priority sector of lending guidelines of RBI. This will give a push to retail lending of electric vehicles. According to the report released by NITI Aayog, the financing market size of electric vehicles is to increase to Rs 40,000 crores by 2025. And it is to increase to Rs 3.7 lakh crores by 2030.

What does the NITI Aayog report say?

• RBI shall consider electric vehicle segments and use cases based on five parameters. They are stakeholder acceptability, techno – economic viability, scalability, generation potential, livelihood and socio – economic potential.
• The report suggests to focus on electric two wheelers, commercial four wheelers and electric three wheelers.
• It suggests the Ministry of Finance to consider the electric vehicle sector as an infrastructure sub sector.
• The other ministries should be pulled into the Electric Vehicle sector in the future.

Current Issues

The buyers are not able to access low – interest rates because of long loan tenures. This is mainly because the bankers are worried about the resale value of these products and product quality.

Significance

Adding the EVs to priority sector, will fast track India’s transition towards electric vehicles. This in turn will help India will achieve its 2070 climate goals.

What is priority sector lending?

The sectors that are considered important for the development of country are listed as priority sector lending. They are usually referred by the RBI and the Government of India. Such sectors receive higher priority in terms of fund allocation, scheme implementation and in other administrative works as well.

How will the suggestion help to boost electric vehicles?

By listing electric vehicles in priority sector lending, they will receive better credit penetration. Also, it will increase lending to small and medium sc