No proposal to advise banks to provide cheap loans for EVs, says Gadkari

There is no proposal under consideration in the Ministry of Road Transport and Highways (MoRTH) to advise the banks to provide car loans at a cheaper interest rate to the buyers of electric vehicles, said Union Minister Nitin Gadkari in Parliament. His statement came in response to a query on whether his ministry proposes to advise banks to provide loans at a cheaper interest rate to purchase environment-friendly vehicles.

Electric vehicles in the country have been witnessing a surging demand for the last few days. While the segment is dominated by electric two-wheelers and three-wheelers, the passenger vehicle segment too is seeing an increasing level of penetration. This has prompted the major auto manufacturers to jump on the bandwagon and introduce electric cars. However, the high price of these vehicles is barring more consumers from buying electric vehicles.

Even if the government has been promoting electric mobility by offering subsidies and incentives under its FAME scheme, the price of electric cars in India after applying the benefits remains above ₹10 lakh, which is a major barrier to the electric passenger vehicle segment's growth in the country. While there have been demands for cheaper interest rates for electric vehicle finance from several stakeholders, the government is not up for introducing any such measure, at least as of now, cleared Gadkari. "No such proposal is under consideration in the Ministry of Road Transport and Highways," the minister said.

Meanwhile, while announcing the Union Budget 2023, Finance Minister Nirmala Sitharaman has allocated an estimated ₹51.72 billion for the FAME-2 scheme for FY24 to incentivize clean mobility. Besides that, the budget has also proposed removing customs duty on importing tools required for making EV batteries in India. This move is expected to help reduce EV prices in the country. Also, the subsidy on electric vehicle batteries has been extended for one year, which would help make EVs cheaper.