Government of India expects additional 38,000 electric buses to ply by 2027

The government of India is optimistic of introducing 38,000 electric buses by 2027 on the back of the US- India payment security mechanism which is expected to provide the EV Bus OEMs the cushion to deploy these buses to various state transport undertakings.

This will enable them to pay up in case of default from several loss-making state transport undertakings. 

This announcement is significant as a tender issued last January 2023 under the National Electric Bus Programme (NEBP) Phase-II, failed to attract bids and hit a roadblock, as established automobile makers refused to bid for its dry lease tender for 4,675 e-buses sighting the absence of a payment security mechanism to protect their payments in case the loss-making state transport undertaking default on the Gross Contract Model by which bus makers get paid on a per km basis. 

To support the remaining 38,000 electric buses, the Indian and US governments have formed a joint fund payment security fund that would be utilised to acquire the balance of electric buses under the NEBP, Dr. Hanif Qureshi, Additional Secretary, Ministry of Heavy Industries said. 

As of now CESL as part India bus aggregation program has aggregated 12,000 electric buses out of the 50,000 electric buses, by the state-run Convergence Energy Services Limited (CESL). 

Older buses, mounting losses, and low occupancy rates plague India’s 56 state transport undertakings. According to road transport ministry estimates close to 56 State transport undertakings across the country have suffered a combined loss of a staggering Rs 17,000 crore.

"I would mention that when our Prime Minister had visited the United States, he met with President Biden and they discussed electric buses., India and the United States have concluded to support the growth of electric buses in India as they will help to decarbonise public transportation.

"They have reached an understanding that a joint fund will be set up, which will be called a payment security fund which will be used to procure electric buses which will be securitised for the next 10 to 12 years" Qureshi added.