Accelerating E-Bus Adoption in India: Bridging the Gap Between Public and Private Operators

Author: Theresa Jose; Editor: Neha Gupta

Credits: Arunima KT

Reducing carbon emissions is critical to a nation’s fight against climate change. India has set an ambitious goal of achieving net zero emissions by 2070. As part of this effort, transitioning to cleaner transport systems is crucial, given that the transport sector contributes nearly 15% of India’s CO2 emissions — over 90% of which comes from road transport.

With the rising number of vehicles leading to congestion and pollution, there is a pressing need for a high-quality, affordable, and accessible public transport system. Encouraging a shift from private vehicles to public transport will not only lower emissions but also improve connectivity for lower-income groups. Among public transport options, buses stand out as the most affordable and sustainable mode, making their transition to electric mobility essential.

Why Electrifying Buses Matters

Buses play a pivotal role in India’s transport landscape. They are cost-effective, convenient, and environmentally friendly, capable of carrying multiple passengers at once, thereby reducing congestion and lowering emissions. However, to further minimise their environmental impact, transitioning from diesel-powered buses to electric buses (e-buses) is essential. Compared to diesel buses, e-buses offer lower operational costs and require less maintenance. The 9-meter models, in particular, have proven to be cost-efficient, profitable, and eco-friendly.

According to research by investment agency ICRA Limited, 11–13% of new bus sales in India were expected to be electric by FY 2025. However, till now (as of February 2025 as per Vahan Dashboard), less than 1% of the total bus fleet has turned electric. While there has been a push for e-bus adoption, progress remains slow. Of the 7,090 e-buses sanctioned under the Faster Adoption and Manufacturing of Electric Vehicles (FAME) subsidy scheme, only 4,901 had been deployed as of August, 2024, leaving a significant gap in implementation.

The Role of Public and Private Bus Operators

Currently, State Transport Units (STUs) are the primary drivers of e-bus adoption in India. These agencies procure e-buses with financial support from the central government and distribute them to various states. As of August 2024, Delhi led the e-bus market with 1,321 e-buses received and deployed, followed by Karnataka with 924 e-buses being deployed out of the 1,121 e-buses so sanctioned. State-level subsidies have played a crucial role in driving this progress.

However, India’s bus ecosystem is largely dominated by private operators, who own and operate 93% of the country’s buses. Despite their overwhelming presence, private players have received minimal support for electrification. Under the FAME II scheme, subsidies primarily targeted public bus fleets, offering incentives of INR 20,000 per kWh, capped at 40% of the vehicle’s cost, with a maximum ex-factory price limit of INR 2 crore.

While new schemes like the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) have aimed to enhance electric mobility, they continue to prioritise STUs over private operators. The PM e-Bus Sewa Scheme, which incentivises public bus operators to transition to e-buses, overlooks private players, limiting the potential for a wider impact. Addressing this imbalance through policy adjustments and incentive-based structures is critical for achieving large-scale electrification.

Challenges in Private Bus Electrification

Despite the environmental and economic advantages of e-buses, private operators face significant hurdles in making the switch. A study indicates that 95% of e-bus owners face greater challenges than their diesel counterparts, particularly concerning financing and loan repayment periods, which typically range from 4–7 years. Other challenges include:

• High financing costs: Limited access to affordable loans makes procurement difficult.
• Lack of charging infrastructure: Unlike private EVs, e-buses require high-powered chargers and specialized infrastructure.
• Operational concerns: Technical knowledge gaps in fleet management hinder smooth adoption.

Unlike light EVs, which can rely on existing charging stations, e-buses require a stable and high-capacity power supply. State-level Special Purpose Vehicles (SPVs) can play a crucial role in addressing infrastructure challenges but current policies lack provisions for supporting private operators in setting up charging stations.

Emerging Private Players in the E-Bus Market

Despite the challenges, some leading private bus operators have taken the leap toward electrification. Companies like NueGo and Chartered Speed have introduced intercity e-buses on key routes, proving that private-sector-led e-bus deployment is possible with the right support. NueGo operates e-buses on routes such as Chennai-Tirupati and Chennai-Pondicherry, offering fares as low as INR 319 per seat. These buses can run up to 250 km on a single charge, even in high-traffic conditions. Similarly, Chartered Speed, a major fleet operator, aims to convert 30% of its fleet to electric by 2025. These pioneers showcase the feasibility of private-sector-led electrification, provided supportive policies and financing mechanisms are in place.

The Way Forward: Enabling Private Bus Electrification

For India to accelerate its clean mobility transition, private bus operators need to be actively included in e-mobility policies. Key recommendations include:

1. Incentives for private operators: Central and state subsidies can extend to private bus owners, offering financial support for vehicle procurement and charging infrastructure.
2. Lower electricity tariffs for Charging Point Operators (CPOs): Similar to transmission companies, CPOs can receive power at subsidised rates to reduce operational costs.
3. Dedicated financing mechanisms: Government-backed loan schemes with longer repayment periods can ease financial barriers.
4. Expansion of charging infrastructure: Special incentives for private operators to set up and operate charging stations can encourage adoption.
5. Policy alignment with global best practices: Lessons from China and Europe — where collaboration between OEMs, local governments, and private players has accelerated e-bus adoption — can offer key learnings for India’s policy landscape.

Electrifying private buses is crucial for achieving India’s clean mobility goals. While STUs have made commendable progress with government support, private operators — who dominate the sector — must also be brought into the fold. With the right mix of incentives, infrastructure development, and policy support, India can create a thriving e-bus ecosystem that benefits both the environment and the economy.