ADB & Shriram Finance Sign Deal To Boost EV Financing in India

The Asian Development Bank (ADB) and Shriram Finance Limited have signed a loan agreement for $150 million to boost access to finance for micro, small, and medium-sized enterprises (MSMEs) in India. The agreement will focus on granting business loans for financing electric vehicles (EVs) and low-emission commercial vehicles for business purposes. The loan will particularly benefit women-owned MSMEs and those in lagging states.

Shriram Finance Limited is a flagship company of the Shriram Group, a non-banking financial company specializing in commercial vehicle financing and MSME lending. This transaction is part of a total $306 million financing package led by ADB as the mandated lead arranger and book runner. This includes a loan of $150 million from the Japan International Cooperation Agency and Rs. 500 million from the Export-Import Bank of India.

“This project underscores ADB’s commitment to supporting financial inclusion and sustainable development in India while addressing the significant financing gap faced by MSMEs,” said ADB Country Director for India Mio Oka. “By partnering with Shriram Finance Limited, we will empower MSMEs, particularly women entrepreneurs, and accelerate the transition to electric mobility, which is crucial for reducing air pollution and achieving India’s climate goals.”

MSMEs play a vital role in India’s economy, contributing 30% of India’s GDP and employing over 123 million people. They face significant challenges in accessing formal credit, with only a quarter of the MSME market being served by financial institutions.

Women entrepreneurs face additional barriers due to social norms and limited access to collateral. ADB’s loan will help bridge this gap by enhancing Shriram Finance’s ability to provide tailored financial solutions to MSMEs, enabling them to reach underserved segments particularly in rural, semi-urban areas and in lagging states, and provide economic opportunities for women-owned MSMEs.

ADB’s loan also supports the government’s initiatives to reduce air pollution through the adoption of EVs and low-emission (Bharat Stage-VI compliant) vehicles. The government’s EV30@30 initiative targets 30% of all new vehicle sales to be electric by 2030.

Shriram Finance Limited Executive Vice Chairman Umesh Revankar. “Our continued partnership with ADB aligns with our corporate mission to drive inclusive growth and support India’s transition to a greener economy. This facility strengthens our commitment to financial inclusion and economic development.”