India’s First Payment Security Mechanism Tender for E-Buses to Be Issued Soon
The first Payment Security Mechanism (PSM) tender for e-buses in India is expected to be released soon, marking a major step in the country’s clean mobility push. Convergence Energy Services Limited (CESL) is in the final stages of preparing the tender, which will include participation from multiple states in its initial phase.
To support this initiative, the Indian government has allocated ₹3,435 crore, aiming to deploy 38,000 electric buses between FY2024-25 and FY2028-29.
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The first payment security mechanism tender for e-buses is expected to provide financial confidence to manufacturers by ensuring timely payments. Under the PSM, dues to Original Equipment Manufacturers (OEMs) will be deducted directly from state funds, reducing financial risk for suppliers.
The initiative marks a strategic shift from traditional procurement methods to the Gross Cost Contract (GCC) model. States can now acquire e-buses on a monthly payment basis instead of making outright purchases. This change helps ease the financial burden on state transport bodies and encourages wider adoption of electric buses.
The timing is ideal, as the e-bus market in India is witnessing rapid growth. Sales surged by 81% in FY24, and industry experts expect the momentum to continue, with annual e-bus sales projected to exceed 17,000 units by FY27.
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With strong government backing and the introduction of the PSM, India is taking concrete steps towards a cleaner and more sustainable public transport system.
