Small Industries Development Bank of India (SIDBI), the primary financial institution for micro, small, and medium-sized enterprises (MSMEs) in India, has partnered with the UK-based Shell Foundation, an initiative of Royal Dutch Shell focused on clean energy initiatives in Africa and India. Together, they have announced the launch of a Risk Sharing Facility (RSF) aimed at supporting India’s EV Mission 30@30, a national initiative targeting a 30% electric vehicle (EV) penetration rate by 2030.
This $6 million initiative, with $3 million contributed by both SIDBI and the Shell Foundation, will provide partial credit guarantees to borrowers who utilize electric two and three-wheelers for commercial purposes. The agreed cap for this guarantee is set at 7.5% of the second loss layer, effectively unlocking around $81 million in commercial capital for EV asset financing, as stated by SIDBI.
Sivasubramanian Ramann, CMD of SIDBI, emphasized the institution’s commitment to promoting EV adoption in line with the EV30@30 mission. SIDBI introduced its own mission, “50K- EV4ECO,” to support the entire EV value chain and facilitate the financing of 50,000 EVs, particularly for MSMEs.
Ramann further explained that the RSF is a crucial instrument to provide initial support to lenders operating in emerging and underserved segments of the EV market. SIDBI’s Mission 50,000-EV4ECO, initiated in April, was designed to assist MSMEs struggling to access loans for purchasing EVs for their daily operations and commercial use, including two-wheelers, three-wheelers, and four-wheelers.
SIDBI noted its collaboration with multilateral organizations in developing EV risk-sharing facilities and financial products. It currently operates two schemes, one for focused non-banking financial companies (NBFCs) in the EV sector and another for participants in the EV value chain and MSMEs.
Jonathan Berman, CEO of Shell Foundation, highlighted the potential impact of the RSF in stimulating the EV financing sector, particularly for two-wheelers and three-wheelers used as income-generating assets. The facility is expected to improve access to electric vehicles for urban transporters, potentially increasing their incomes by up to 70%.
Furthermore, the RSF is expected to pave the way for broader support to the ecosystem through multilateral assistance for the EVOLVE program, as per the release.