Will EV Catalyse India's Public Transport?

India being the third-largest car market in the world, is prepping for an EV future but it still has to close in many loose ends. Today EV’s make up 7.44 per cent of total sales which is unlikely to contribute to India’s ambitious aspirations, even with aggressive government regulations and technological advancements. 

The EV spotlight today has been claimed by tech-driven two and four wheelers but the real game changer? The electrification of public transportation. With the global EV market expected to skyrocket to US$ 802.81 billion by 2027, India is on course to become a major player in this high-stakes race.

With India also making a bold commitment to Net Zero emissions by 2070, time is not on our hand. The question therefore is not whether India will embrace electrification of public transport but rather how fast it will make the transition. 

Urgency of Electrifying Public Transport

India’s urban centres are suffocating under high pollution levels and traffic congestion, both of which can be offset if electrification of public transport is achieved even to a certain degree.

The transition of all transport modes to EVs can drastically reduce carbon emissions and total cost of ownership in a vehicle’s total life cycle. Transport currently contributes nearly 14 per cent of India's total greenhouse gas emissions, making EV adoption in public transport a crucial step toward sustainability.

Additionally, public transport electrification has economic advantages. Evidence shows that e-buses have 30-40 per cent lower operating costs compared to diesel buses due to lower maintenance and fuel costs. Table 1 below gives you some perspective.

Over a typical lifespan of 12 years, an electric bus can save between between US$ 73,000 and US$ 173,000 in fuel and maintenance costs (at current prices). While electric buses are more expensive to procure — around US$ 400,000 compared to US$ 150,000 for diesel buses, the long-term operational savings make them financially more viable.

A 2023 Niti Aayog report shows that full-scale electrification of India’s bus fleet can save around to 30 million metric tonnes of CO2 annually which can positively improve a city’s air quality. 

Government Policies and Support

1. FAME II Scheme

With an initial outlay of Rs 10,000 crore (US$ 1.3 billion), the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME II) scheme launched in 2019 has been promoting EV update proactively particularly in Public Transport. The subsidies are provided for buses, three-wheelers and taxis to encourage fleet electrification as well as for charging station manufacturers. As of 2023, 7000 buses had been sanctioned under FAME II (see below).

Under FAME II, only 71.42 per cent of buses have been deployed from the originally set target revealing a significant gap between policy ambitions and ground execution.

Addressing logistical challenges, supply chain constraints, and state-level execution issues could further accelerate deployment and enhance the scheme’s impact on sustainable mobility in India. Data in Figure 2 below validates this.

2. National Electric Bus Programme (NEBP)

The National Electric Bus Programme (NEBP), initiated in 2022 had set a goal of deploying 50,000 electric buses across India by 2030. However, as of 2024, only 4901 e-buses are operational which represents just 10 per cent of the set target.

A major barrier is the financial instability of State Transport Undertakings (STUs), many of which face significant debts and operational losses. To mitigate these challenges, the NEBP promotes alternative financing models such as The Demand Aggregation Model (implemented by Convergence Energy Services Limited), consolidating demand to achieve competitive pricing and The Gross Cost Contract (GCC) Model, which allows OEMs to lease buses to STUs with payments based on usage, reducing upfront costs.

For NEBP to meet its goals, the agency will have to enhance financial support, ensure timely payments to OEMs, and invest in credible charging infrastructure. PPP’s will be a major driver in transforming India’s urban transport towards sustainability. 

3. State-Level Incentives

Delhi, Maharashtra and Tamil Nadu have initiated their own EV policies which offer tax incentives, subsidies and free EV registration. To exemplify further, Delhi’s EV policy targets 25 per cent electrification of all new vehicles by 2024 and gives financial support to auto-rickshaws and taxis.

On the other hand, Maharashtra’s EV policy has set a target of converting 15 per cent of its public transport buses to electric by 2025. The following table highlights the Electric Vehicle (EV) penetration rates in select Indian states as of Fiscal Year (FY) 2024.

Challenges In EV Adoption For Public Transport

With the government through policy making is promoting EV’s in public transportation, several challenges still persist which prevent large-scale adoption.

High Initial Costs and Charging Infrastructure Deficit: Electric buses necessitate major upfront investment. For instance, Tata’s Starbus EV is priced around 92 per cent higher than Ashok Leyland’s 12M FE Diesel Tourist bus. Further, the limited number of charging stations has impeded electric buses from attaining full operational efficiency and is constantly underperforming as a result.

Battery Performance Range, Grid Load Management: Battery technologies in India are currently limited by a range of 150 to 250 kilometers per charge which prove to be highly inefficient for longer routes. 

Such limited range necessiates frequent charging which has disrupts the service schedules of Public Transport operations. Frequent charging can negatively impact the electricity grid especially during peak hours and cause major disruptions. 

To offset this, smart energy solutions like Vehicle to Grid (V2G) Integration becomes a need. Technologies like V2G allows EVs to supply electricity back to the grid during periods of high demand, thus effectively balancing demand and supply. 

Public Perception and Resistance to Change: Public Transport operators remain doubtful about the long-term feasibility and reliability of EVs compared to diesel vehicles. Performance concerns, high upfront costs and limited charging infrastructure as started by the Ministry of Heavy Industries are major challenges which are hindering widespread adoption of EV buses.  

Awareness campaigns like “Go Electric” alongside financial incentives under the PM E-DRIVE scheme (Rs 10,900 crore), aim to change public perceptions which can lead to high EV adoption. 

Thus, addressing these challenges requires multi-pronged approach, including financial incentives, technological advancements, infrastructure development and awareness programmes to build a sense of confidence among stakeholders in the public transport sector.

Policy Recommendations

A comprehensive policy framework is needed to accelerate the adoption of EVs in public transportation. The framework stated below provides a multi-stakeholder approach which is necessary to ensure a smooth transition to electrified public transport. 

Enhancing Charging Infrastructure: Developing a strategic and comprehensive charging network is essential to ensure the seamless operation of electric public transport. Fast charging at metro hubs, bus depots and major urban spots is crucial. The Ministry of Power has given guidelines to support the development of such crucial infrastructure to create an enabling EV ecosystem. 

Financial Incentives, PPPs: Tax exemptions, sustained subsidies and low-interest financing for electric fleet operators can be major drivers for wider EV adoption. Low-interest financing options for electric fleet operators can help the transition to EVs more economically feasible. The FAME scheme exemplifies such initiatives, providing financial incentives to promote EV adoption. 

Advancements In Battery Technology And Swapping Stations: Investments in research and development is essential is key towards enhancing battery efficiency, lifespan, affordability, scalability and operational efficiency. Battery swapping becomes a practical solution is a lot of situations as it reduces vehicle downtime, especially for high-utilisation autos and delivery fleet operators which use two wheelers extensively. Niti Aayog has been very active in formulating policies which have promoted advanced battery technologies and infrastructure development. 

Integration With Renewable Energy: Reduction in carbon footprint and operational costs can be achieved once solar-powered charging stations are established. Energy storage solutions need to be further incentivized as it can help in technology advancements and eventually help in balancing peak electricity demand and lead to power grid stability in the long term.

Collaboration between renewable energy operators and the EV sector is thus crucial to develop a comprehensive energy ecosystem. Niti Aayog has also highlighted the importance of such integration to achieve reduction in emissions from transport. 

Digital And Data-Driven Solutions: Real-time data monitoring and predictive AI-based maintenance systems can enhance vehicle reliability and reduce operational deficiencies. Integration of digital payment systems and automated fare collection can play a major role in improving commuter experience, making public transport more efficient and user-friendly.  

India can thus foster a conducive environment for widespread adoption of EVs in public transport by embracing these policy measures. Economies of scale, knowledge sharing and a comprehensive EV ecosystem can become a reality with strategic interventions by both the government and the private sector. 

Case Studies From India

Bengaluru and Delhi have taken significant effort to achieve electrification of public transport systems, with the goal of reducing pollution and enhancing operational efficiency. 

Delhi's Electric Bus Expansion: Under FAME II, Delhi Transport Corporation (DTC) has procured and sanctioned 300 electric buses. With DTC further planning to add 6380 buses by end of 2025, the city has positioned itself as a leader when it comes to EV adoption in India. This commitment also aligns with the Delhi government’s broader strategy of modernising its public transport fleet and promoting sustainable urban mobility. Until now, the city has received assistance to run 1300 electric buses at an estimated cost of Rs 600 crore.

Bengaluru's Smart Mobility Model: The Bengaluru Metropolitan Transport Corporation (BMTC) has introduced electric buses with latest technologies to offer a seamless commuter experience. Under the Bengaluru Smart City Scheme, BMTC has deployed 90 electric buses out of which 60 are operating from Yeshwantpur Traffic and Transit Management Centre (TTMC) to Kempegowda International Airport and 30 non-AC electric buses across major city routes.

These buses are equipped with the Intelligent Transport System (ITS), which includes GPS-enabled vehicle tracking and electronic ticketing systems. This initiative is expected to lead to massive improvement in operational efficiency and provide real-time information to passengers to better plan their routes and manage traffic flows better. 

Driving Towards A Greener Tomorrow

India’s EV transformation is more than just a technological shift — it is rather a commitment towards a cleaner and inevitable sustainable future. By addressing existing roadblocks and leveraging technological innovations, India can emerge as a leader in green mobility.

The electrification of public transport can not only help in reducing emissions, but also lead to creation of new economic opportunities. India can be well positioned to be a major player in the global EV revolution with the creation of an enabling ecosystem.

The journey has begun and with the right interventions along the way, India’s public transport landscape can truly become a foresight-oriented benchmark for sustainable urban mobility worldwide. 

(The writer is a public policy and urban transportation enthusiast and specialist. Views are personal)