India's bus industry is undergoing a structural shift toward electrification, driven by government procurement programmes, falling battery costs, and expanding charging infrastructure, according to a report published by KPMG in India in May 2026.
Around 16,300 electric buses were operational on Indian roads as of March 2026, out of approximately 46,000 awarded under various government schemes, against a backdrop of nearly 62,000 tenders issued over six years. The report, titled 'Electrifying India's Bus Industry – The Decade of Transformation', projects overall electric bus penetration rising from around 7% of annual sales today to 35–40% by FY35.
More than 90% of current electric bus deployments have been driven by government-led tenders and public transport undertakings. Successive central schemes — FAME I, FAME II, PM-eBus Sewa and PM E-DRIVE — have progressively shifted procurement from outright purchase to Gross Cost Contract models, while also allocating funds for depot infrastructure and public charging networks. India plans to tender an estimated 40,000 additional electric buses by FY30, with central programmes targeting large cities as well as Tier-2 and Tier-3 towns.
The gap between tenders awarded and buses actually deployed reflects persistent structural challenges: supply chain dependencies on imported battery cells, power electronics and traction motors; inadequate depot and charging infrastructure, particularly in smaller cities; and delayed payments from State Transport Undertakings to operators.
To address payment risk, the government has established a Payment Security Fund under PM-eBus Sewa, which supports over 38,000 bus deployments and requires operators to be paid within 30 days from a central fund in the event of a state default.
On economics, electric buses in public intracity operations have already achieved total cost of ownership parity with diesel and CNG alternatives at daily runs of 150 kilometres or more. As battery costs decline, this breakeven threshold is expected to fall below 120 kilometres by FY35, widening the pool of viable routes. For private intercity operators, TCO parity with diesel is projected around 2030 at daily runs of roughly 300 kilometres.
Rohan Rao, Partner, Automotive & Lead, Electric Mobility, KPMG India said: "India's electric bus transition is moving beyond a policy-led initiative to becoming a structural transformation opportunity for the broader mobility ecosystem. Public transport electrification has already created strong momentum, supported by government procurement programmes, improving cost economics, and increasing infrastructure investments."
"Going forward, the focus will increasingly shift towards building a scalable ecosystem that combines domestic manufacturing, financing innovation, charging infrastructure expansion, and operational efficiency to support sustainable long-term growth across both public and private transport segments," he added.
The private bus segment, which accounts for 65–70% of annual bus sales and carries around 220 million passengers daily, remains at an early stage of electrification. High upfront costs, limited charging infrastructure on intercity routes, and a lack of targeted policy incentives have slowed adoption.
Near-term deployment is expected in airport shuttles, platform-based mobility and select intercity corridors, with technology startups planning to deploy approximately 15,000–16,000 electric buses over the next few years.
The electric bus supply market is more competitive than the conventional bus segment, with new players securing around 65% of tenders awarded to date. Technology access through global partnerships has allowed startups to compete alongside established manufacturers. Localisation of key components — particularly battery cells, where dependence on Chinese imports remains very high — is a critical vulnerability.
Government responses include Production Linked Incentive schemes, phased manufacturing mandates requiring up to 50% domestic value addition, and strategic programmes on semiconductors and critical minerals.
Raghavan Viswanathan, Partner, Deal Advisory, KPMG in India, said: "India's e-bus ecosystem is entering a critical phase where scale, localization, and execution capabilities will become key differentiators. While public transport undertakings continue to lead adoption, the next phase of growth is expected to emerge from private intercity mobility, airport transport, platform-based mobility solutions, and corporate fleets. The transition will require coordinated action across OEMs, operators, infrastructure providers, financiers, and policymakers to address supply chain resilience, charging readiness, financing accessibility, and operational sustainability as India accelerates towards its broader clean mobility and net-zero ambitions."
Public transport EV penetration is projected to exceed 85% by FY35, driven primarily by the intracity segment. Private sector growth is expected to accelerate after FY30, once TCO benefits, product parity with diesel models, and highway charging infrastructure align.
The report identifies coordinated action across manufacturers, operators, financiers, infrastructure providers and policymakers as the central requirement for translating current tender pipelines into operational fleets.