In 2024, India’s automotive sector came tantalisingly close to a major milestone: Electric vehicle sales surged to nearly 2 million, pushing EV penetration to 7.5 per cent from 6.4 per cent the previous year. But the sector’s progress wasn’t even – the electric bus (e-bus) segment lagged, despite claiming the lion’s share of government subsidies.
The sluggish adoption of e-buses, according to sector experts, underscores the complexities of shifting to greener public transport. They attribute the slow progress to delays in tender execution and bus deployment by original equipment manufacturers (OEMs).
Of the Rs 83,448 crore allocated under schemes like the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME-II), PM-eBus Sewa, PM-eBus Sewa-Payment Security Mechanism (PSM), and PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE), 83 per cent (Rs 69,771 crore) was reserved for e-buses. Yet the segment managed only a marginal improvement in penetration, rising to 3.5 per cent in 2024 from 3.2 per cent in 2023 — the lowest among all EV categories.
Meanwhile, electric two-wheelers (e2Ws) and three-wheelers (e3Ws) delivered stronger results. E2W penetration climbed to 6.1 per cent from 5.0 per cent, and e3Ws surged to 56.6 per cent from 52.8 per cent. Passenger EVs (4Ws), backed solely by FAME-II support, showed moderate growth.
“The delay in tender execution is the primary reason for the poor performance in the bus segment,” explains Preetesh Singh, a specialist in alternative powertrains at NRI Consulting & Solutions. “Deployment of buses takes over a year after tenders are awarded, so delays in concluding them disrupt manufacturers’ production pipelines. In some cases, OEMs are also defaulting on deliveries,” Singh adds.
Responsibility for aggregating demand and managing e-bus auctions rests with Convergence Energy Services Limited (CESL), a government-run agency under Energy Efficiency Services Limited (EESL). EESL is a joint venture of four public-sector power firms: NTPC, Power Finance Corporation, REC Ltd, and Power Grid Corporation of India.
CESL’s handling of tenders has drawn criticism. Its first PM-eBus Sewa tender for 3,600 buses, floated in November 2023, remains unresolved. A second tender for 3,132 buses, issued in March 2024, is also pending. Earlier in 2023, CESL cancelled its tender for a 4,675-bus dry lease without providing adequate notification.
Queries sent over the past two months by Business Standard to CESL and EESL regarding the details about CESL’s bus tenders, their execution, and deployment timelines have remained unanswered.
According to sector experts, much of the progress in e-bus deployment has come from state governments, including Karnataka, Maharashtra, Uttar Pradesh, and Delhi, which have issued their own tenders.
“CESL doesn’t share data publicly, so it’s difficult to track how many buses are linked to its tenders,” said a sector expert. “Estimates suggest more than 70 percent of deployed e-buses are tied to state-level initiatives.”
Industry executives have also raised concerns about with CESL’s approach. “CESL keeps floating new tenders and making amendments without completing any tender since 2023,” said an executive whose company participates in CESL tenders. “The government needs to streamline the process and address delays.”
The consequences could be far-reaching. Delays in e-bus deployment not only jeopardise the government’s short-term goal of replacing polluting diesel buses but also threaten its $10-billion National Electric Bus Program (NEBP). By 2027, the government aims to deploy 50,000 e-buses and achieve 40 per cent e-bus penetration by 2030. Experts warn that these delays could hamper India’s larger ambition of achieving net-zero emissions by 2070.
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