Govt charts plan to paint 800k diesel buses green, scheme likely to replace FAME III

New Delhi: The government is working on a plan to replace 800,000 diesel buses, more than a third of the total on roads, with electric ones over the next seven years. Apart from lowering vehicular emissions, this is also expected to catalyse investments in the electric vehicle (EV) ecosystem in the country.

The replacement plan includes 200,000 electric buses for state transport undertakings (STUs), 550,000 for private operators, and 50,000 for schools and employee transportation by 2030, top government sources told ET.

Designed to electrify the country's public transport systems, the plan is likely to replace the third leg of the Faster Adoption and Manufacturing Electric Vehicles (FAME) incentive programme and pitch India as a global manufacturing hub for EVs.


To put the plan in context, about 138,000 electric buses were sold in China and 4,000 in Europe in 2022.

"Replacing diesel buses with electric ones will not only address environmental concerns but also help create an ecosystem for electric vehicles," said one of the persons cited above. "It will accelerate the establishment of a widespread charging infrastructure, generate investments, bring about scale, which will reduce per-unit cost, and simultaneously create jobs in manufacturing."

According to industry estimates, ₹1.2-1.5 lakh crore capital will be required to roll out 100,000 electric buses in the country at present prices. The government is in the process of consulting stakeholders to draw up the contours of the scheme that may be unveiled next fiscal year.

There have been two meetings of top government officials and representatives from multilateral institutions on how to aggregate and convert the demand, a senior official aware of the development told ET, adding that the focus of talks has been on placing large procurement tenders to lower the per-unit cost and distributing the vehicles to existing transporters.

Around 4,000 electric buses are running on Indian roads today, compared with 2.3 million diesel and CNG buses operating in the country.

"India currently has about 2,300,000 buses, of which 140,000 are run by public transport authorities. The conversion of private buses to electric is an important step in India's decarbonisation efforts," said Saurabh Kumar, vice president, the Global Energy Alliance for People and Planet (GEAPP) in India.

"Financial institutions would have to come on board, like they did while investing in developing mass rapid transit systems (MRTS), to electrify buses at this scale," said another person aware of the development. "The government is keen as they feel, rather than incentivising personal buyers who can afford electric cars and two-wheelers, it is better to invest resources in a segment which will have the highest impact, socially as well as environmentally."

The development comes at a time when the Indian government, along with the US, announced plans at the COP28 Summit in Dubai to set up a joint payment security mechanism (PSM) for deploying 38,000 electric buses in the country to achieve net zero targets.

Overall, the Centre is aiming to introduce 50,000 electric buses over the next five years under the existing National Electric Bus Programme (NEBP) to contain crude imports and cut vehicular pollution. The PSM will guarantee delayed payments from fiscally constrained state transport companies, helping quicken the electrification of the country's bus fleet.