PM-eBus Sewa: Paving India’s Path to Electric Public Mobility

Image Source: Getty Images

The increasing focus on clean urban transport worldwide has enabled a paradigm shift towards electrified public transport. In India, a country of fast-growing urban populations and urgently requiring eco-friendly transit options, electric vehicle (EV)-friendly initiatives hold particular significance. At this juncture, the PM-eBus Sewa aims to transform the urban bus transit system by encouraging the adoption of electric buses.

The PM-eBus Sewa is a comprehensive programme to enhance the operating capacity of city bus networks through the seamless integration of electric buses into current public bus fleets. Its public-private partnership (PPP) model combines the strengths of Original Equipment Manufacturers (OEMs) and owners to operate electric bus fleets in cities.

To facilitate its viability and scalability, the scheme offers a 100 percent Central Assistance (CA) for the creation of necessary infrastructure, including behind-the-meter power arrangements, charging stations, and civil depot facilities. Moreover, to balance financial outlays and ensure long-term sustainability, the scheme provides operational subsidy as a function of distance travelled. This financial support is guaranteed for a period of up to 10 years or till 31 March 2037, whichever is earlier. The subsidy rate is calibrated based on the size of the electric bus: INR 24 per kilometre for normal (12 m) buses, INR 22 per kilometre for midi (9 m) buses, and INR 20 per kilometre for mini (7 m) buses. The extent of concessional support is graduated with reference to different geographical and administrative units—States, Union Territories (UTs), and hilly or North-Eastern units.

To facilitate its viability and scalability, the scheme offers a 100 percent Central Assistance (CA) for the creation of necessary infrastructure, including behind-the-meter power arrangements, charging stations, and civil depot facilities.

This strategic plan will reduce the initial capital outlay of Public Transport Authorities (PTAs) while also guaranteeing the long-term operational and financial viability of the electric bus fleet with ongoing assistance.

Payment Security with the PSM Scheme

With a budgetary outlay of INR 3,435.33 crore, the PM-eBus Sewa aims to address the payment default risk that has so far impeded the mass deployment of electric buses. The scheme provides crucial financial assistance towards the acquisition and operation of more than 38,000 e-buses over five years from 2024-25 to 2028-29. This policy action directly counters the financing risks that have slowed the development of electric public transport.

The scheme operates on the back of a strong payment guarantee model. If an OEM is not paid by a defaulting Public Transport Authority (PTA), then Convergence Energy Services Ltd. (CESL) steps in through a dedicated fund to pay the OEM on time. The defaulting PTA is to repay this fund within 90 days. If even this payment is not made, the Reserve Bank of India can invoke a Direct Debit Mandate (DDM) to complete the same. This entails a late-payment surcharge (LPS) to be determined based on the State Bank of India’s 3-year Marginal Cost of Funds-based Lending Rate (MCLR) compounded annually, plus an additional 1 percent per annum.

With a budgetary outlay of INR 3,435.33 crore, the PM-eBus Sewa aims to address the payment default risk that has so far impeded the mass deployment of electric buses. The scheme provides crucial financial assistance towards the acquisition and operation of more than 38,000 e-buses over five years from 2024-25 to 2028-29.

This mechanism, in turn, improves the financial viability of e-bus contracts, lowering counterparty risks for OEMs and making investments in the industry more appealing. By improving financial security, the scheme is well-placed to attract a wider range of investors, including foreign firms interested in entering the Indian EV industry.

Present Status of PM eBus Sewa Scheme

The first phase of the plan, with 3,825 e-buses, offers a glimpse of its potential size and its contribution to reducing fossil fuel dependence. Even with the current grid constraints, the buses will reduce lifetime greenhouse gas emissions by ~19 percent compared to diesel buses. In 12 years, they would prevent emissions of 1,200 tons of NOx and 700 tons of CO, thereby improving urban air quality and public health. Additionally, the plan will create between 45,000 and 55,000 direct jobs, thereby increasing economic activity.

Recent actions mirror the diverse and dynamic strategies being pursued at the state level. The Centre has sanctioned 328 e-buses for Chandigarh, the highest number of e-buses sanctioned for any city. The central government is also funding the procurement of these buses. On the other hand, in Karnataka, the Mangaluru authorities are championing a different approach, where subsidies are provided to state governments and not private operators. The authorities assert that this would increase state-run transport operations and simplify the implementation process. These examples indicate the complex interaction between a centrally designed policy, regional institutional priorities, and the ongoing evolution of best governance practices.

Even with the current grid constraints, the buses will reduce lifetime greenhouse gas emissions by ~19 percent compared to diesel buses. In 12 years, they would prevent emissions of 1,200 tons of NOx and 700 tons of CO.

The Way Forward

The following strategic improvements can maximise the potential of the PM-eBus Sewa:

• First, encouraging higher use of the Payment Security Mechanism (PSM) and making its escrow models even simpler will minimise risk premiums for OEMs and induce higher market participation.
• Second, the government must tailor power supply infrastructure planning to each city's specific needs to fast-track depot electrification and charging schedule optimisation.
• Third, the Centre must develop a national platform to monitor the implementation of accessibility features, including wheelchair ramps and priority seats, and assess the environmental performance of the e-buses deployed.
• Fourth, state-level institutions should be encouraged to experiment with hybrid models of subsidies that leverage the efficiency of Public-Private Partnerships (PPPs), with public agencies enforcing rigorous monitoring to achieve superior governance outcomes in focused areas.
• Finally, facilitating research collaborations can enable long-term analysis of the scheme’s financial health and emissions implications. Such information will constitute a solid evidence base for future scaling and policymaking.

Conclusion

The PM-eBus Sewa Scheme, anchored by its innovative Public Sector Model (PSM), is a significant departure from India’s urban transport policy. The scheme harmoniously integrates financial creativity with the ideals of environmental sustainability and social equity. Through the operation of thousands of electric buses under a risk-insulated Public-Private Partnership (PPP) model, the scheme is driving the transition towards cleaner and more inclusive urban transport.

The PM-eBus Sewa Scheme, anchored by its innovative Public Sector Model (PSM), is a significant departure from India’s urban transport policy. The scheme harmoniously integrates financial creativity with the ideals of environmental sustainability and social equity.

The scheme will also help stimulate economic growth and cut emissions considerably. As more data from the scheme becomes available and operating models are optimised, India is becoming a world leader in green mobility. Beyond importing new technology, PM-eBus Sewa is developing a scalable, inclusive, and sustainable public transportation system that can become a model of urban policy innovation for the entire world.

Nandan H Dawda is a Fellow with the Urban Studies programme at the Observer Research Foundation.

• Transportation
• India
• e buses scheme
• eco friendly transit india
• PM eBus Sewa
• pm ebus sewa payment security mechanism
• pm ebus sewa scheme
• sustainable public transportation
• urban transport policy in india

The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.

PREV NEXT