Greening India’s transportation

Financing the transition to electric mobility

  • Article type Story
  • Publication date 01 Feb 2024

Driving through the congested streets of Delhi, it’s impossible to ignore the diverse number of crawling vehicles, each of them bargaining for the next empty space of road to alleviate them from the traffic standstill. The fumes and emissions from each car, truck, bus, rickshaw, and scooter, all contributing to a major source of air pollution across the most populated nation in the world.

Transportation is India’s third-highest greenhouse gas-emitting sector, contributing 13 per cent of total CO2 emissions, an amount that has tripled since 1990 due to the rapid rate at which India’s economy, population, and levels of industrialisation continue to grow. Research shows that fine particulate matter pollution (PM2.5) mainly originates from combustion emissions which can reduce life expectancy in India more than communicable diseases and malnutrition.

The Government of India has recognised transportation as a key priority as part of India’s pledge to achieve net zero carbon emission by 2070. However, the transition to electric vehicles (EVs) poses new challenges for the market as users grapple with the lack of suitable financing, energy market complexity, and technology risk. In particular, bus and heavy goods fleet owners face limited and often costly financing options, which prevent them from migrating to e-vehicles. To combat this, the Green Climate Fund (GCF) partnered with Macquarie Asset Management (MAM) to accelerate financing to support India’s e-mobility transition. 

The India E-Mobility Financing Program will provide tailored financing and electrification solutions that will rapidly reduce the long-term and high upfront cost of EV ownership to a level more comparable to conventional vehicles, address impediments related to EV charging infrastructure, and mobilise significant amounts of private sector institutional capital to boost the EV market share. The support of GCF will help mobilise a significant amount of nascent but hesitant institutional capital to facilitate this transition.

“The platform will provide tailored leasing and financing solutions in a way that brings about a parity in the cost of electric vehicles and conventional vehicles, so it brings it to a point of indifference when choosing between them. In addition to piloting leasing and financing solutions, the platform also straddles the entire value chain, and that includes critical infrastructure, which is required to support a thriving electric vehicle sector. In a sense, it aims to create an ecosystem in the country within which electric vehicles will grow sustainably.”
Rajeev Mahajan, GCF Climate Investment Manager

The project, which aims to mobilise around USD 1.5 billion over the next 10 years, will focus on nominated segments within the EV ecosystem including shared fleet, e-buses, and charging infrastructure before scaling and expanding into other e-mobility sub-sectors. Consequently, an enabling environment for EV growth will be established, leading to a boost in market penetration, domestic manufacturing, and a critical decrease in air pollution.

GCF has committed to USD 200 million of equity to establish its first purely private sector transport programme in the mobility sector, whilst Macquarie aims to raise a further USD 205 million from institutional investors to capitalise the platform. The blended finance structure is designed to crowd-in private sector capital and accelerate the shift to low emission and climate-resilient development through electric mobility.

Over its 10-year implementation period, the project is expected to deliver a reduction of 9.5 MtCO2e of greenhouse gas emissions. The transition to EVs, especially in urban areas, will reduce pollution and contribute to significant improvements in air quality and related health benefits including life expectancy for generations to come.  


By Zeenia Dastur