New Delhi: India Ratings and Research (Ind-Ra) believes the share of electric buses (e-buses) in overall new bus sales in India could increase to 10%-12% by FY27 from levels of 5% in FY25. This would be driven by the government’s thrust to de-carbonise India’s road transportation sector, a supporting policy framework, and the total ownership cost of e-buses being more feasible compared to internal combustion engine vehicles. However, the gaps in charging infrastructure, supply chain issues, and the exclusion of private operators from the subsidy scheme would continue to pose key challenges to the e-bus industry in the near term. Nevertheless, e-bus adoption is likely to grow rapidly in the medium-to-long term, backed by a strong order book, supportive policies, and the low penetration of buses in India.
De-carbonisation in Progress: As India aims to reduce its carbon intensity up to 45% by 2030, and further to net zero by 2070, electrification of road transportation would remain a key focus area. This is because road transportation accounts for 12% of India’s energy-related CO2 emissions and is a key contributor to urban pollution. As per a Niti Aayog report, although trucks and buses make up only 4% of India’s vehicle fleet, they account for nearly 50% of total emissions, making them prime candidates for accelerated electrification.
Bus penetration in India is fairly low compared to some of the other South-Asian markets. Furthermore, the e-buses industry is also at a very nascent stage, with only 5% penetration compared to over 60% in China (source: IEA Global EV Outlook 2025), offering significant scope for expansion. At present, e-bus deployment is largely confined to a few cities such as Delhi, Mumbai, Bengaluru, Ahmedabad and Lucknow. Under the initial phase of PM E-DRIVE scheme, the buses have mainly been deployed in these five cities, in view of high vehicular traffic and severe pollution levels. However, considering the government’s plans to expand e-bus presence in tier-2 and tier-3 cities gradually, the scope for e-bus deployment will increase manifold.
Cost Comparative Analysis: E-buses entail higher upfront purchase costs (including subsidies and financing requirements) compared to diesel and compressed natural gas (CNG) buses. However, given their lower cost of operation, the total cost of ownership (TCO) of e-buses is lower than that of diesel and CNG buses. Moreover, CNG availability is largely restricted to major cities in India, and also, developing charging infrastructure for e-buses is much easier compared to setting up CNG stations.
Push from Government Schemes: The government has laid out several schemes from time to time to support the adoption of e-buses in India. Post the expiry of the FAME-II scheme, the government introduced the PM E-DRIVE Scheme in FY25 with an outlay of INR109 billion for the deployment of e-buses and establishment of charging infrastructure. The scheme subsidises up to INR10,000/kWh (capped at INR3.5 million) on the purchase of electric buses for state transport undertakings (STUs). Additionally, the PM e-Bus Sewa Scheme target e-bus adoption under the public-private-partnership model, and grants assistance for the development of behind-the-meter power infrastructure and civil depot infrastructure, including battery charging stations. Furthermore, the payment security mechanism of the PM e-Bus Sewa Scheme ensures timely payments to e-bus operators.
Prevailing Challenges: While e-buses offer compelling advantages in terms of lower operating costs and environmental impact, their adoption has beenimpeded by challenges such as inadequate charging infrastructure, exclusion of private electric bus operators from major schemes, and delayed deliveries of e-buses by original equipment manufacturers. As per industry estimates, India has less than one-third of EV charging stations compared to total fuel refilling stations. Furthermore, majority of the government policies have been focused on STUs, which operate only 5%-7% of the total buses registered in India, and have been witnessing significant losses, declining fleet size and low fleet utilisation. This poses the risk of delayed payments, restricting the enhancement of electric fleet size. While the risk is mitigated to a large extent by the gross cost contract model along with the payment security mechanism scheme of the government, the inclusion of private bus operators is imperative for the segment to grow rapidly.
Furthermore, e-bus deliveries in India have been slower than expected, primarily due to supply chain bottlenecks. The top five OEMs together hold an order book of more than 25,000 e-buses to be delivered over the next one-to-two years. However, the industry has noted delays in servicing these orders on account of supply chain issues, including dependence on imports for some of the critical components and essential minerals. Major OEMs have reported shortages of key components such as batteries, chassis, and powertrains, many of which are imported, causing delays in production. Additionally, the lack of alternate indigenous suppliers of crucial parts further constrains the ability to fulfill large orders quickly. India is developing local manufacturing capacities for batteries, with significant investments coming in; however, the same could take some time.
The adoption of e-buses in India marks a promising shift towards a cleaner and more cost-efficient public transport. While the journey has been shaped by notable benefits such as reduced emissions and lower operating costs supported by government subsidies, it has also faced challenges such as infrastructure gaps, supply chain delays, and financing hurdles. Addressing these issues through targeted policy support and industry collaboration will be crucial to sustain the momentum in e-bus adoption.