India’s government and the World Bank are in talks to introduce a risk-sharing mechanism to compensate banks giving loans for electric vehicle purchases, an official said, as the country seeks to decarbonize the transport sector.
The risk instrument will help banks hedge against loan defaults and cut the cost of financing EVs, India’s G20 sherpa Amitabh Kant said at the sidelines of an industry event in New Delhi. Kant was CEO of government thinktank NITI Aayog until June this year, spearheading state policy decisions across the economy.
The switch to clean transport in the South Asian nation is slower than in the US and China in part due to the sluggish adoption of battery-powered vehicles. The high cost of these vehicles and insufficient charging stations are a major barriers with BloombergNEF saying that by 2040, 53 percent of new automobile sales in India will be electric, well behind China with 77 percent.
Banks in India have been reluctant to give loans for EV purchases at a time when the cost of insuring these vehicles is high and the resale market remains small, said Kant, who was recently appointed India’s main negotiator when it becomes the chair of the Group of 20 countries in December.
The government is also working on a battery-swapping program to expedite the adoption of electric scooters and rickshaws, which are growing faster the than the four-wheeler segment.