Union Budget 2025 | Crucial to recognise role NBFCs play in driving EV adoption in India: Kapil Garg, MD of Mufin Green Finance

With Finance Minister Nirmala Sitharaman set to present the Union Budget on February 1, 2025, industry leaders are waiting with bated breath to see what the upcoming budget entails for their respective sectors.

With the potential to reduce air pollution and boost employment, the EV sector is looking to the government for robust support and forward-thinking policies.

"As we look toward the Union Budget 2025, it is crucial to recognize the role NBFCs play in driving electric vehicle adoption in India. One of the significant challenges in the EV sector is the high upfront cost, which often acts as a barrier for consumers. NBFCs can address this by offering innovative financing solutions, but supportive policy measures from the government are essential to scale these efforts effectively," Kapil Garg, MD of Mufin Green Finance told.

Urging the government to prioritise the inclusion of EV financing under the Reserve Bank of India's Priority Sector Lending guidelines, Garg added that this would incentivise financial institutions and lower borrowing costs for consumers.

He believes that tax exemptions on TDS for NBFCs, similar to banks, could also help improve cash flow and enable competitive lending rates.

"To further boost the sector, introducing government-backed refinance options through institutions like SIDBI would strengthen NBFCs' capacity to extend credit. Simultaneously, allocating funds to build robust and widespread charging infrastructure is essential to address range anxiety and foster consumer confidence in electric mobility," Garg added.

With these measures, Garg believes that the budget can help "transform the EV financing ecosystem, enabling NBFCs to play a pivotal role in accelerating the transition to sustainable mobility and supporting India’s environmental and economic goals."