India To Expand E-Bus Fleet By 80% In Fiscal 2025, Says Crisil Report

India may see a significant surge in the deployment of electric buses, with a projected 75–80% year-on-year increase, reaching 6,000–6,500 units this fiscal year, according to Crisil Ratings. 

A series of policy initiatives and budget allocations aimed at reducing carbon emissions in public transport and fostering the adoption of e-buses are driving this rapid growth, albeit from a small base.

A key factor behind the increasing adoption is the Gross Cost Contract, or GCC, model, which has emerged as the preferred route for e-bus procurement by state transport undertakings, the report said. 

The GCC model provides an asset-light approach for STUs, eliminating upfront capital expenditure as operators finance the buses, said Gautam Shahi, director of Crisil. Operators benefit from steady income through assured rentals per kilometre, with tariffs adjusted for inflation, ensuring a healthy 10–11% internal rate of return over the concession period, he added.

Crisil predicts declining battery costs will lower e-buses' purchase price, potentially benefiting STUs through reduced rental rates and boosting their adoption through economies of scale in production.

The central government's initiatives, including the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles, have led to 24,000 e-bus orders for this fiscal year, the ratings agency said.

The PM-eBus Sewa Scheme, launched in August 2023, aims to address counterparty risk and delayed payments by implementing a dedicated payment security fund for bus operators, ensuring timely payments according to concession agreements.

"The existing strong e-bus order book, along with the remaining orders of 7,800 buses to be awarded under the PM-eBus Sewa Scheme, will give a significant boost to the sector," said Pallavi Singh, associate director at Crisil.