Budget 2024 expectations: Include battery prices in financing and insurance costs to boost electric vehicle adoption, says PHF Leasing Limited CEO

With the Interim Budget set to be tabled on February 1, non-banking financial companies (NBFCs) are seeking some relief in the form of subventions or subsidised rates of financing particularly tailored for electric light commercial vehicles (ELCVs). This industry is pivotal to aiding the widespread adoption of electric vehicles.

Over the past few years, sustainability and clean energy have received significant attention globally. India, too, has been vying to make headway in this direction with comprehensive policies and incentives for environmentally friendly vehicles. The burden of pollution and the growing understanding of the climate crisis have catalysed a shift towards electric vehicles. However, this transition will likely be sluggish without proper financial support, impacting India's sustainability goals.

NBFCs, the custodians of the loan sector for ELCVs, enlighten us about the critical need for financial interventions. These entities cater to a substantial segment of consumers who cannot avail themselves loans from traditional banking institutions due to stringent prerequisites. However, the high risk associated with these loans and marginal benefits have resulted in an arduous road ahead for NBFCs. This is where the Union Budget could play a decisive role.

Shalya Gupta, the chief executive officer of PHF Leasing Limited, says, "The Government of India is focused on the twin principles of development and sustainability.  Alongside 'Sabka Saath, Sabka Vikas' is a commitment to being Carbon Neutral or having Net Zero emissions by 2070. In this context, electric light commercial vehicles (eLCVs) are becoming a promising employment generation and low-emission solution. E-rickshaws provide affordable accessibility and last-mile connectivity to all, while eLCVs help transport goods to the doorstep."

"We are hopeful that GOI will propagate the faster adoption of eLCVs by not just continuing to subsidise the end consumer but also by easing the process of registration for the vehicles. I am hopeful that the Government will also, in conjunction with the industry, set a framework whereby battery prices can be lowered." He said this will further lower the product's value, easing the burden on the already marginalised consumer.

"On the lines of the PLI for manufacturing, we are hoping that the government will give some subsidies or subsidised rates of financing for the NBFC sector engaged in providing loans for the purchase of the ELCVs. We are also hopeful that the Government will take steps to include the battery price in the financing and insurance costs," he added further.