The Government of India has made significant progress in implementing the PM e-Bus Sewa – Payment Security Mechanism (PSM) Scheme, aimed at strengthening financial reliability and accelerating electric bus deployment across states.
The scheme, notified on October 28, 2024, has seen active participation from states and steady movement in procurement and infrastructure development, according to an official update released on Tuesday.
States Onboard, Financial Mechanism Strengthened
As part of the implementation framework, 19 States and Union Territories have submitted Direct Debit Mandates (DDMs) to the Reserve Bank of India as of March 12, 2026.
The government has also published detailed scheme guidelines and standard operating procedures (SOPs) to streamline execution.
To operationalize the financial backbone of the scheme, an initial tranche of ₹500 crore has been disbursed to Convergence Energy Services Limited (CESL) during FY 2025–26 for the establishment of the Payment Security Mechanism fund.
Bus Procurement Gains Momentum
Under the PM e-Bus Sewa initiative led by the Ministry of Housing and Urban Affairs (MoHUA):
- Tenders for 6,228 electric buses have been concluded
- Letters of Award have been issued for 4,720 buses by Public Transport Authorities
In parallel, under the PM e-Drive scheme:
- Tenders for 10,900 buses have been finalized
- Procurement for an additional 2,900 buses is currently underway
Infrastructure Investments Cross ₹1,700 Crore
The government has also ramped up investments in supporting infrastructure, including charging and depot facilities.
- ₹1,254.38 crore has been sanctioned for behind-the-meter power infrastructure
- ₹483.70 crore has been allocated for civil depot infrastructure
These investments are expected to enable smooth deployment and operation of electric bus fleets across the country.
Deployment Timeline and Payment Security Framework
The deployment timeline for buses varies by project but is generally set at two years from the signing of concession agreements between Public Transport Authorities and manufacturers.
The PSM Scheme offers payment security coverage for up to 12 years per bus, providing long-term financial assurance to operators and investors.
Additionally, states are given a 90-day repayment window for funds disbursed under the mechanism, along with applicable late payment surcharge provisions. This framework is designed to ensure financial discipline and stability for State Transport Undertakings.
Boost to India’s Electric Mobility Push
The PM e-Bus Sewa–PSM Scheme is a key initiative in India’s broader push toward clean and sustainable urban transport. By ensuring timely payments and reducing financial risks, the scheme is expected to attract private participation and accelerate the adoption of electric buses nationwide.
