In a significant shift, the share of electric buses (e-buses) in India’s new bus sales is anticipated to double, climbing from around 4% last fiscal year to an estimated 8% in the upcoming fiscal year. This forecasted surge is propelled by two key factors driving the transformation of the country’s public transport sector.
Primarily, the central government’s committed efforts toward decarbonizing public transportation are making a substantial impact. E-buses are being deployed through tenders awarded under initiatives such as the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) scheme and the National Electric Bus Programme (NEBP).
The second significant factor is the favorable total cost of ownership (TCO) of e-buses compared to internal combustion engine (ICE) and compressed natural gas (CNG) buses. This cost efficiency is driven by lower operational costs and a declining initial acquisition expense.
Under programs like FAME and NEBP, state transportation units (STUs) have initiated the procurement of e-buses through models like the gross cost contract (GCC) and outright purchase. Over 5,760 e-buses have been delivered to date, with plans for deployment of 10,000 more in the current and upcoming fiscal years.
Sushant Sarode, Director at CRISIL Ratings, highlighted, “The growth in e-buses is supported by their favorable ownership economics, with an estimated total cost of ownership 15-20% lower than ICE and CNG buses over a 15-year lifespan, achieving breakeven in 6-7 years.”
However, challenges related to adoption persist. High counterparty risk due to constrained financial flexibility of STUs has led to elongated debtor cycles, creating concerns among lenders. Additionally, inadequate battery charging infrastructure remains a hurdle, particularly for intercity bus operations.
Pallavi Singh, Team Leader at CRISIL Ratings, noted, “The recently announced PM-eBus Sewa Scheme is aimed at addressing payment security mechanisms and establishing battery charging infrastructure to bolster e-bus adoption.”
Despite government-driven initiatives primarily targeting the public transport sector, e-bus adoption in the private sector remains limited. To accelerate e-bus penetration, experts emphasize the need for a policy framework to engage the private sector, which constitutes approximately 90% of the country’s bus fleet.
Looking ahead, observers will closely monitor policy changes, advancements in battery technology, and the implementation of a payment security mechanism to gauge the trajectory of e-bus adoption in India.
