Rise of India as an electric bus power

In recent years, the Government of India, particularly through the Ministry Of Heavy Industries (MHI), has been actively fostering the growth of electric buses (e-buses) as a key component of its strategy to promote sustainable transportation solutions. At present, State Transport Undertakings (STUs) operate approximately 1.47 lakh buses, with the majority being diesel-powered (~1.31 lakh) and a smaller fraction running on compressed natural gas (CNG) (~13,000). However, the e-bus segment remains relatively modest, comprising only around 3,900 vehicles.

Looking ahead to 2030, with a projected fleet requirement of approximately 3.7 lakhs for STUs, there arises a pressing need for modernization and expansion of the transportation infrastructure. This imperative is underscored by the fact that around 35,000 diesel buses within the STU fleet are aged over 10 years, necessitating urgent measures to transition towards cleaner and more sustainable alternatives.

The number of electric buses in India has been steadily rising as can be seen by the data taken from the Vahan portal of the Ministry of Road Transport and Highways.

Government Initiatives

In response to these challenges, the Ministry of Heavy Industries has launched strategic initiatives to accelerate the adoption of e-buses. The National E-Bus Program aims to deploy 50,000 electric buses across the country. This ambitious target reflects the government's commitment to reducing carbon emissions and combating climate change while simultaneously addressing the pressing need for modernization within the transportation sector.

FAME

Central to the growth of e-buses is the implementation of schemes like Faster Adoption and Manufacturing of Electric Vehicles (FAME) II, initiated by the MHI. Under FAME II, significant subsidies are provided to STUs and entities to incentivize the procurement of e-buses. These subsidies, coupled with conducive policy frameworks, aim to create a favorable environment for the widespread adoption of electric mobility.

The percentage of e-buses sold in the last 3 years in India reveals that about 7.3% of new buses sold in India are now electric.

Which model is better Opex or GCC?

Moreover, the operational model for e-buses, emphasizing Gross Cost Contract (GCC) or Operational Expenditure (OPEX), further facilitates their integration into public transportation fleets. Under this model, private operators are entrusted with the operation and maintenance of e-buses for STUs, thereby ensuring efficient management while mitigating financial risks.

Payment security mechanism

MHI is considering a payment security mechanism for electric buses. This mechanism would act as a safety net for electric bus manufacturers (OEMs) in case state-run transport departments (STUs) fail to make timely payments. STUs have faced financial difficulties in the past, and this uncertainty discourages some OEMs from participating in e-bus projects. The payment security mechanism is expected to have a positive ripple effect. With the risk of non-payment reduced, more OEMs are likely to enter the e-bus market, leading to increased competition and potentially lower per-kilometer bids. Additionally, this initiative would improve the financial viability of e-bus projects, making them more attractive to lenders and beneficial for both STUs and manufacturers. This move, coupled with ongoing efforts to bring down electric vehicle costs, is expected to significantly accelerate India's shift towards eco-friendly public transport.

In addition to the electric buses operated by the STUs, there are another ~23 lac buses that are privately run. If adequate charging infrastructure is created and facilitation for this sector is also made then India can be a world leader in manufacturing and adoption of electric buses.

Climate Change

By transitioning to electric buses, India can significantly reduce its carbon footprint. These buses produce zero tailpipe emissions, eliminating harmful pollutants like nitrogen oxides and particulate matter that contribute to air pollution and respiratory diseases. Moreover, as India continues to invest in renewable energy sources like solar and wind power, the environmental benefits of electric buses will further amplify, as they rely on cleaner energy sources for charging. Embracing electric buses not only aligns with India's commitment to combat climate change but also promotes sustainable urban mobility, fostering cleaner and healthier cities for generations to come.

Growth with job creation and technology

By championing the growth of e-buses, the Ministry of Heavy Industries is not only driving technological innovation and advancements but also fostering economic growth and job creation within the burgeoning electric vehicle industry. This industry is expected to grow at a CAGR of 49% for the next 7 years.

The concerted efforts towards electrification in public transportation not only address immediate concerns regarding fleet modernization but also align with broader sustainability objectives, thereby paving the way for a cleaner and greener future for India's transportation landscape.

?