Zero Markup: Government to Launch 0% Markup Loan Scheme for E-Bikes and Rickshaws

Zero Markup: Government to Launch 0% Markup Loan Scheme for E-Bikes and Rickshaws

Following a wave of negative news, there is finally something positive for the low-income people. The government has approved 0% markup loans for electric bikes and rickshaws. This e-rikshaw and e-bike government loan scheme has been approved under the Prime Minister’s Youth Program with an estimated cost of around 7.5 billion rupees for a specific period. 

Let’s see the details here.

0% Markup Loan Scheme for E-Bikes and Rickshaws

Economic Coordination Committee (ECC) has approved a financing facility upon the summary moved by the Ministry of Industries Pakistan. It is done under PM’s Youth Business & Agriculture Loan Scheme (PMYB&ALS) which is expected to elevate the demand for electric bikes and rickshaws. 

Under this scheme, a clean loan of up to 500,000 (0.5M) rupees will be provided under Tier-I (T1) of PMYB&ALS. It will be given at a 0% markup rate with the repayment duration of 3 years. However, this facility is only available for up to 15,000 e-bikes/rickshaws in the current year. It is expected to be scaled up to 60,000 electric bikes and rickshaws in 2023-24 and 100,000 in 2024-25 respectively.

  • For the first year, the subsidy amount would be Rs.1.5 bn
  • For the second year (2023-24), the subsidy amount would be Rs.6 bn
  • For the third year (2024-25), the subsidy amount would be Rs.10 bn

Another important thing to remember is that the nitty-gritty of the scheme still needs to be finalized. For this purpose, the key stakeholders will be the PM’s Youth Programme, the State Bank of Pakistan, the Bank of Punjab and the National Rural Support Programme.

Government Plan

The government has set the EVs penetration target of 50% by 2026 in the Auto Industry Development & Export Policy 2021-26. For this purpose, the government has already imposed a very low customs duty and sales tax of 1% each for the import of EVs-specific parts. 

It is important to note that the average cost of an electric bike with a Li-Ion battery is around Rs.190,000 (Special standards are assumed by the Ministry of Industries and Engineering Development Board). The actual market price varies. With this high cost, the EVs penetration in the market seems a little difficult.

Why This Government Loan Scheme for Electric Bikes and Rickshaws?

Do you know that there are over 26M motorcycles on the roads (annual market size is more than 2 million produced locally)? But where is the problem? Well! These motorbikes are estimated to consume around $3 billion worth of fuel per year. Now, in this economic crisis when we don’t have much foreign exchange, this figure hurts very much. 

So, it is the reason why the government is taking this initiative which will not only reduce the import bill but also help low-income people to reduce their expenses. The government has already issued 22 manufacturing licenses to the e-bikes manufacturers which have resulted in the production of 7,377 electric bikes during 2021-2022.

What do you think about this initiative? Would you buy an electric bike or rikshaw under this scheme after it is announced? Tell us in the comment section below.

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