Electric bus sales have failed to make significant inroads into the tradition diesel-powered bus market over the past few years.
With only a fortnight to the end of the the financial year, electric bus sales stood at 3,124 units in FY25, about 400 units fewer than the previous fiscal, the government’s Vahan portal data showed.
The data also showed that penetration of electric buses in FY25 was the lowest since FY22, with only 4.72% of all buses being electric, half FY22’s 9.34%.
Penetration of electric vehicles refers to the share of electric vehicles sold and registered in a particular period, compared with the total vehicles sold and registered in the same period. In this case, penetration of electric buses is the number of electric buses out of all buses sold in a financial year.
This assumes importance as the government plans to spend about 40% of the ₹10,900-crore PM E-drive scheme allocation towards electrification of public transport. It has allocated ₹4,391 crore towards the rollout of a little over 14,000 electric buses by providing the vehicles at a subsidized price. The target for this outlay is the end of FY26.
The PM E-drive scheme followed two iterations of the FAME scheme. FAME refers to Faster Adoption and Manufacturing of Electric (and Hybrid) vehicles. Under all three schemes, electric vehicle makers have to sell their products at a subsidized price to consumers. The government then reimburses the amount to the manufacturer.
PM E-drive was different from the previous FAME scheme due to its massive outlay on public transportation.
This plan to incentivize the electrification of public transport, announced in October 2024, included electrification of intra-city buses in nine cities in the country. But the government is yet to start incentivizing such zero-emission buses, as it is still in the process of estimating potential demand from state and municipal authorities in multiple cities.
Formerly approved
Mint reported earlier that the ministry of heavy industries had approved a demand for 9,800 electric buses in Bengaluru and Hyderabad. The other cities included in the scheme are Ahmedabad, Surat, Mumbai, Delhi, Pune, Kolkata, and Chennai. But there are massive hurdles to cross before electric buses can incentivized under the schemes.
For instance, after estimating demand for the buses, the government has to conduct a bidding process to determine the final number of buses to be allocated to each city.
The ministry of heavy industries also notified the phased manufacturing programme (PMP) for electric buses under the PM E-drive scheme on 5 March. The PMP is a list of components that bus makers are allowed to import. Only those electric buses which meet the standards set in the PMP will be eligible for incentives under the scheme.
Under the new PMP for electric buses, manufacturers are only allowed to import 10 components; all others have to be manufactured locally. The components allowed to be imported include HVAC (Heating, Ventilation and Air Conditioning) systems, traction battery pack, and battery management systems.
In alignment
The goal of electrification of public transportation also aligns with the economic survey for FY25, which said such a move would be instrumental in reducing carbon emissions.
“Given India’s vast size and limited land availability, public transportation is a more efficient alternative for viable energy transition. Therefore, national-level policies and local nudges must promote and facilitate its use, going beyond the focus on tail-pipe emissions of private transportation choices,” the economic survey, published on 31 January, said.
India’s electric bus market is nascent, but has shown signs of accepting the zero-emission technology. Electric bus sales nearly doubled to 2,006 units in FY23, from 1,187 the year before. FY24 also showed a high margin of increase in sales, with over 3,500 units sold.
But this flow has stagnated in FY25.
The share of electric buses among total buses sold dipped to 5.84% in FY23, from 9.34% the year before. But it then recovered marginally to 6.07% in FY24. In FY25, however, with electric bus sales stagnating and overall bus sales rising, the penetration of electric buses fell.
CareEdge ratings, however, said the situation is promising in the near future. The ratings agency forecast on 11 March that India’s annual electric bus sales will reach the 17,000-mark by FY27 backed by government support through various schemes including PM E-drive, a robust domestic manufacturing capacity, and the fact that the total cost of ownership of an air-conditioned electric bus is about 15-20% lower than that of an air-conditioned diesel bus over a 12-year period.
“India has significant e-bus potential, with only six electric buses per million people, compared to the global average of 85 people,” CareEdge ratings said in a report dated 11 March.
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