According to informed sources, the Federal Government’s E-Bikes/ Rickshaws Scheme will be open to up to 15,000 applicants. If the number of applicants exceeds the threshold, the Prime Minister’s Youth Business & Agriculture Loan Scheme (PMYB&ALS) will hold a poll.
According to sources, the Ministry of Industries and Production briefed the ECC on April 13, 2023, that in order to facilitate the manufacturing of Electric Vehicles (EV) in the country, the Federal Government had allowed the import of Electric Vehicles’ specific parts at the rate of 1% Customs Duty and 1% Sales Tax.
The agreed incentives have been incorporated into Auto Industry Development and Export Policy (AIDEP 2021-26) clause 3.3. In its EV Policy 2019, the Ministry of Climate Change set an EV penetration target of 50% of new sales of two and three-wheeler EVs by 2030.
E-bikes/e-rickshaws: PMYB&ALS model approved by ECC
To supplement the supply-side objectives and fiscal measures, the Prime Minister established a Committee to investigate the viability of E-Bikes and the incentive structure to make E-Bikes affordable. On December 28, 2022, a thorough presentation on E-Bikes was delivered to the Federal Government based on the Committee’s recommendations.
The following is the introduction’s key facts and figures: (i) the country has more than 26.3 million motorcycles; (ii) the annual market size of motorcycles produced locally is more than 2 million; (iii) existing bikes on the road consumed $3 billion in fuel annually; (iv) EDB has issued twenty-two manufacturing licenses to manufacturers of E-Bikes; and (v) 7,377 units of electric motorcycles were manufactured in 2021-22.
The forum was also told that the average price of an E-Bike with a Lithium battery and specified requirements was Rs 190,000. Due to the expensive cost, EV penetration in the country is low. Four financing plans based on different criteria were presented in order to establish a speedy and sustainable demand for E-Bikes/ Rickshaws in the country, which are as follows:
Scheme-1-Cash Purchase Model: (i) the government contributes Rs 100,000 through banks acting as processing agents, and (ii) the customer contributes PKR 90,000 from their own funds.
Scheme-2-Price Sharing Model: (i) Rs 100,000 on a sharing basis (Govt. share 90%, customer share 10%); Rs 90,000 as a bank loan (24 months); and (ii) 50% credit guarantee by the government to the banks.
Scheme-3-Easy Loan Model: (i) 30% down payment by customers; (ii) 36-month loan tenure; and (iii) 23% interest rate with the government paying up only 50% of the interest rate over a three-year lease period, with the government providing a 50% credit guarantee.
PMYB&ALS (Prime Minister’s Youth Business and Agriculture Loan Scheme) Model for E-Bikes/E-Rickshaws: (i) A clean loan of up to Rs 0.5 million is available under Tier-1 (T1) of PMYB&ALS on personal guarantee at a 0% mark-up; (ii) loan repayment in three years; (iii) to explore the option, a meeting with representatives of the following stakeholders was held on March 10, 2023- (a) Prime Minister’s Youth Programme, (b) State Bank of Pakistan, (c) The Bank of Punjab, (d) two and three
The Ministry of Industries and Production informed that the four programmes had distinct financial requirements and would require funding from either the government or commercial institutions. It was said that all key parties who supported the ideas were consulted.
However, due to financial constraints, the Finance Division did not endorse the first three suggestions. Considering the Finance Division’s suggestions, a fourth option was investigated and thoroughly discussed with all relevant stakeholders.
The Ministry of Industries and Production further stated that, given the current economic situation and available financial resources, Scheme 4 is the most feasible choice for increasing demand for E-Bikes and E-Rickshaws in the domestic market. To carry out the idea in the fourth Scheme, a portion of the money previously allocated for PMYB&ALS might be dedicated for the uptake of E-Bikes/E-Rickshaws in the country.
The Economic Coordination Committee (ECC) approved Scheme 4 for up to 15,000 electric bicycles/rickshaws. If the number of applicants exceeds 15,000, PMYB&AC will conduct a balloting process.
