Govt Schemes for Electric Buses in India: A Detailed Overview

The Indian government has been actively promoting electric mobility to reduce carbon emissions, improve air quality, and reduce dependency on fossil fuels. In this effort, multiple schemes have been launched to encourage the adoption of electric buses, supporting both manufacturers and public transport operators.

This article provides a comprehensive overview govt schemes for electric buses in India currently in place for electric buses and how stakeholders can avail their benefits.

Also Read: Govt Approves 9,800 E-Buses for Bengaluru, Hyderabad Under PM E-Drive Scheme

Key Government Schemes for Electric Buses

1. PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme

The PM E-DRIVE scheme, launched in September 2024, has replaced the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme.

With an allocation of ₹10,900 crore, this scheme aims to accelerate electric vehicle adoption across multiple categories, including electric buses.

Key Features:

• Support for 14,028 electric buses to enhance public transportation networks.
• Financial assistance for electric two-wheelers, three-wheelers, and trucks.
• Charging infrastructure development: Installation of 22,100 fast chargers for electric four-wheelers and 1,800 fast chargers for electric buses.
• Subsidies and incentives for manufacturers to scale up EV production.

2. PM e-Bus Sewa Scheme

Announced in August 2023, the PM e-Bus Sewa Scheme is designed to facilitate the deployment and operation of 10,000 electric buses in 169 cities.

Key Features:

• ₹57,613 crore budget allocation with cost-sharing between the central and state governments.
• Focus on underserved cities to provide efficient and eco-friendly public transportation.
• Procurement and operation of electric buses under a Public-Private Partnership (PPP) model.
• Financial incentives to state transport undertakings (STUs) for adopting electric buses.

3. PM e-Bus Sewa-Payment Security Mechanism (PSM) Scheme

Launched in October 2024, this scheme aims to ensure timely payments to bus operators and enhance the financial viability of electric bus projects.

Public transport authorities such as STUs procure electric buses through two models – gross cost contract (GCC) and outright purchase. Under the GCC model, operators manage the operation and maintenance of the buses, with STUs paying a per-kilometer cost.

STUs are not required to pay the upfront cost of the bus under the GCC model. However, STUs often find it difficult to procure and operate electric buses because of their high upfront cost and lower realization of revenue from operations. OEMs or operators are generally hesitant to engage in this model due to concerns about potential payment defaults.

Through the PSM scheme, the government expects to address this concern by ensuring timely payments to OEMs or operators through a dedicated fund. In case of default of payments, the implementing agency CESL will make necessary payments from the scheme funds which will be later recouped by the STUs.

Key Features:

• ₹3,435.33 crore allocated for guaranteeing payment security for electric bus operators.
• Support for over 38,000 electric buses nationwide.
• Encourages private sector participation in electric bus operations.

4. Production Linked Incentive (PLI) Scheme for the Automotive Sector

The PLI scheme, launched to boost domestic manufacturing of electric and hydrogen fuel cell vehicles, includes substantial incentives for electric buses.

Key Features:

• ₹26,000 crore outlay for EV and hydrogen vehicle production.
• Financial incentives for manufacturers producing electric buses and components.
• Aims to make India a global hub for electric bus manufacturing.

How Public and Private Bus Operators Can Avail Benefits

Public Bus Operators (State Transport Undertakings – STUs)

Eligibility:

• STUs can apply for demand incentives under schemes like PM E-DRIVE and PM e-Bus Sewa.
• Buses must meet specified technical requirements and be procured through approved channels.

Application Process:

1. Proposal Submission: Prepare detailed project reports outlining requirements, deployment plans, and utilization of incentives.
2. Approval and Sanction: Proposals are reviewed by the respective implementing agencies. Upon approval, funds are disbursed as per the scheme’s guidelines.

Implementation:

• Procurement: Follow transparent and competitive bidding processes to procure electric buses, ensuring compliance with technical and operational standards.
• Reporting: Regularly update the implementing agencies on deployment status, operational performance, and utilization of funds.

Private Bus Operators

1. Participate in Public Transport Contracts

• Gross Cost Contract (GCC) Model: Cities hire private bus operators to run electric buses. The government owns the buses, and private operators manage operations and maintenance under a contract, earning a fixed amount per kilometer.
• How to Apply: Private companies should bid for city transport contracts when tenders are issued.

2. Apply for PM E-DRIVE Subsidies

• Subsidies: The PM E-DRIVE scheme provides subsidies for private bus operators purchasing electric buses.
• How to Apply: Eligible private transport companies or fleet operators can apply for subsidies as per the guidelines specified by the Ministry of Heavy Industries.

3. Utilize Viability Gap Funding (VGF)

• Revenue-Sharing Model: Under PM e-Bus Sewa, cities can partner with private bus operators using a revenue-sharing model, providing financial support for maintaining and operating the buses.

Key Documents Required for Application

• Project Proposal: For STUs detailing the deployment plan and fund utilization.
• Bidding Documents: For private operators participating in government tenders.
• Company Registration and Financial Records: For private firms applying for PM E-DRIVE subsidies.
• Operational Plan: Detailing routes and bus management strategies.

Also Read: 347 Electric Buses for Punjab Sanctioned Under PM e-Bus Seva Scheme

The Indian government’s policies and schemes for electric buses are paving the way for a cleaner and more efficient public transport system.

With large-scale funding, subsidy programs, and infrastructure development initiatives, both public and private stakeholders have significant opportunities to contribute to India’s green mobility transition.

As electric buses gain momentum, these schemes are set to redefine the country’s public transportation landscape, making it more sustainable and future-ready.