India’s public road transport system is moving steadily toward electrification, with electric buses expected to account for around 13% of total bus sales by FY28. At present, electric buses make up only about 4% of annual registrations in FY25, but the segment is recording strong year-on-year growth. The expansion is being driven by government incentives, new business models, and a strong manufacturing pipeline.
Earlier estimates had suggested that electric bus penetration could reach 15% by FY27. However, progress has slowed due to delays by State Transport Undertakings (STUs) in allocating depot space and setting up charging infrastructure. These bottlenecks have pushed adoption timelines further out. Currently, India has around eight electric buses per million people, far below the global average of 94 per million. This gap highlights the significant growth opportunity in the coming years.
Adoption remains largely concentrated in major cities. Delhi leads the country with about 4,244 electric bus registrations, followed by Maharashtra and Karnataka. To expand deployment beyond metro cities, the government has introduced schemes such as the PM e-Bus Sewa initiative, which aims to support electric bus operations in Tier II and Tier III cities. Additional financial support under the PM e-Drive scheme and the recent Union Budget announcement to deploy 4,000 more electric buses are expected to accelerate growth across states.
A major factor supporting this transition is the shift to the Gross Cost Contract (GCC) model. Under this model, STUs do not directly purchase buses. Instead, private operators procure, operate, and maintain the buses and are paid a fixed rate per kilometre. This pay-as-you-go structure reduces upfront financial pressure on state transport bodies and transfers operational and maintenance risks to private players. Improved contract terms, including payment security mechanisms and inflation-linked tariff adjustments, have also made projects more bankable and attractive to investors.
On the manufacturing side, the market is increasingly dominated by four leading companies: Olectra, JBM, PMI Electro Mobility, and Switch Mobility. Together, these four players account for nearly 76% of the market share in the first nine months of FY26. Their combined annual production capacity stands at around 32,000 units. With an order book of approximately 31,000 electric buses, these companies have strong production visibility for the next one to two years. This concentration indicates a maturing supply ecosystem with established players capable of handling large-scale deployments.
From a cost perspective, electric buses are becoming more competitive. Over a 12-year lifecycle, the total cost of ownership for an air-conditioned electric bus is estimated to be 15–20% lower than that of a diesel bus. However, sustained growth will depend on timely fund disbursement from government schemes, faster development of charging infrastructure, and consistent payments from STUs to private operators.
If these operational and financial challenges are addressed, annual electric bus sales could rise to nearly 20,000 units by FY28, marking a major shift in India’s public transport landscape.
