The report highlights the government’s commitment to overall decarbonisation, particularly in public transport, as a significant enabler for the increased adoption of e-buses 

 In a recent report, CRISIL Ratings stated that the share of electric buses (e-buses) in India is poised to double to 8 per cent in the next fiscal year, citing supportive policy measures and favourable ownership costs as key drivers.

Despite existing challenges such as counterparty risks and insufficient charging infrastructure, the report highlights the government’s commitment to overall decarbonisation, particularly in public transport, as a significant enabler for the increased adoption of e-buses.

The report underscores that the total cost of ownership plays a pivotal role in driving sales of e-buses, with lower operating costs and decreasing initial acquisition costs contributing to their attractiveness compared to internal combustion engine (ICE) and compressed natural gas (CNG) buses.

The Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicles (FAME) scheme and the National Electric Bus Programme (NEBP), launched in 2015 and 2022, respectively, have been instrumental in deploying e-buses through tenders, with 5,760 e-buses delivered to date and an additional 10,000 set to be deployed in the upcoming fiscal years.

The report acknowledges the success of the Gross Cost Contract (GCC) model, offering assured rentals, fee revisions linked to inflation, and mitigating traffic risk as contributing factors to the growing adoption of e-buses. Sushant Sarode, a director with CRISIL Ratings, emphasises the favourable ownership economics, estimating a 15-20 per cent lower cost compared to petrol/diesel or CNG buses over a 15-year lifespan, with breakeven achieved in six to seven years.

Despite the positive outlook, the report identifies challenges, including high counterparty risks due to the financial constraints of state transport undertakings and inadequate battery charging infrastructure for intercity bus operations.

Pallavi Singh, a team leader at CRISIL Ratings, highlights the recently announced PM-e-bus Seva scheme, which aims to address payment security mechanisms and facilitate timely payments to operators, along with creating essential battery charging infrastructure.

The proposed PM-e-bus Seva scheme targets the deployment of 10,000 e-buses across 169 cities and charging infrastructure in 181 cities. The success of the scheme is deemed critical to driving further e-bus penetration. Additionally, the report emphasises the need for a policy framework to encourage private sector participation, which constitutes about 90 per cent of the bus fleet, to accelerate the adoption of e-buses in India.