Payment Security Mechanism Crucial to Boost E-Bus Growth in FY26
India Ratings and Research (Ind-Ra) has maintained a stable rating outlook for e-bus projects in FY26, citing a satisfactory operational track record, strong sponsor support, and improving e-bus deliveries.
In its analysis of the Ind-Ra rating outlook, The Economic Times has highlighted the Payment Security Mechanism (PSM) as a crucial factor for financial stability in India’s e-bus sector
As per Ind-Ra, the proposed PSM can enhance project bankability, attracting further investments into India’s e-bus sector.
With over 20,000 e-buses already bid out by public transport authorities (PTAs), Ind-Ra emphasized that OEMs must scale up their delivery capacity to meet commitments in FY26 and FY27.
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Key Factors Supporting E-Bus Growth in FY26
India’s e-bus sector is set for significant expansion, driven by government initiatives, financial support, and increased participation from OEMs and private operators. Here are the key factors that substantiate this growth:
| Factor | Details |
|---|---|
| Total e-buses deployed | Over 10,000 under government initiatives |
| Upcoming orders | More than 20,000 e-buses bid out by PTAs |
| Government investment | INR 282.16 billion allocated for e-buses |
| Payment security fund | INR 34.35 billion, ensuring smooth payments |
| Key monitorable | OEM delivery capacity & financial stability |
How Payment Security Mechanism Strengthens E-Bus Expansion
To support e-bus operators and maintain financial stability, the Payment Security Mechanism (PSM) ensures that bus operators receive timely payments, preventing cash flow issues.
The agency highlighted that the INR 34.35 billion Payment Security Fund (PSF) could sustain payments for around 38,000 e-buses, assuming:
- 200 km per day operations per bus
- INR 65 per km payment model
- 60% of invoices raised under PSM
A strong payment security system encourages OEMs and private operators to participate in e-bus tenders, boosting fleet expansion.
Government’s Role in Scaling the E-Bus Network
To accelerate e-bus adoption, the government has allocated INR 282.16 billion under various schemes. Ind-Ra noted that consistent government support, along with PSM, will improve investor confidence in e-bus projects.
Government Investment in E-Bus Projects
| Scheme | Investment (INR Billion) | E-Buses Supported |
|---|---|---|
| FAME I | 2.8 | 425 |
| FAME II | 34.35 | 6,862 |
| PM-eBus Sewa | 200 | 10,000 |
| PM Electric Drive Revolution | 43.91 | 14,028 |
CESL to Implement PSM for Secure Payments
Convergence Energy Services Limited (CESL) will act as the implementing agency for PSM. CESL will oversee direct debit mandates with RBI, allowing state governments to automatically replenish PSF funds in case of delayed payments (Economic Times).
The agency highlighted that a proven track record of timely payments will improve debt tie-ups for e-bus projects, helping operators scale their fleets.
Private Sector Interest in E-Buses & Leasing Models
With a secure payment system in place, the private sector is expected to participate more actively in e-bus adoption. The financial intermediaries may introduce:
- Fixed per-km pricing models
- Monthly rental-based leasing for operators
- Fleet expansion with reduced upfront costs
Ind-Ra noted that private sector leasing models could accelerate e-bus adoption, making the industry less dependent on large upfront capital.
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Challenges & The Road Ahead
While e-buses offer lower operational costs, Ind-Ra emphasized that heavy-duty charging infrastructure remains a challenge. The agency also noted that route flexibility and charging network expansion will be key to ensuring sustained e-bus growth.
With Ind-Ra’s stable rating outlook, the Payment Security Mechanism ensuring financial stability, and government backing, the e-bus sector is expected to expand significantly in FY26.
