Electric Buses Modus Operandi in India

For electric buses, the Department of Heavy Industries (DHI), under FAME scheme, has approved two e-bus procurement methods/ operation models:

  • Outright purchase model:  In outright purchase model, the DHI provides a 60% subsidy for procurement and the rest is borne by the State Road Transport Corporations (SRTCs). The SRTCs own the e-bus fleet and is responsible for its O&M activities.
  • Gross Cost Contract (GCC) model (a type of PPP model): In case of Gross Cost Contract (GCC) model, the operator/ supplier contracts with the transport corporation and is paid on a fixed cost per km basis. The supplier is responsible for procurement of e-buses and related O&M infrastructure.

For public buses, the right bus operation model would take care of various streams of finance for the state/ city transport corporation, effective provision of passenger services, O&M activities etc.

Under the FAME 1 scheme, DHI provided subsidy of upto 60% of purchase cost of e-bus over 3 years in 3 installments of 20% each. In case of subsidy allocation under FAME 2, DHI funds upto 40% of the estimated cost of the bus.

Traditionally, public buses have been operated by staffs employed by state or city transport undertaking, hence, most of these corporations released tenders under outright purchase model, leading to more successful tenders/ contract awards under this model than opex or GCC model. Among all the culminated tenders under FAME 1, about 74% of the total bus order quantity are procured through outright purchase mode/ capex mode. Only Telangana’s TSRTC and Mumbai’s BEST placed e-bus orders solely through GCC mode. Himachal Pradesh’s HRTC is the only transport authority which has procured e-buses via both the modes.

FAME 1 – Culminated e-bus procurement tenders

electric buses

Source – UITP, JMK Research

GCC gradually became the preferred model for many cash-strapped SRTCs (especially when the procurement order was large), though, later, under the FAME 2 scheme, this operation model became a mandate for availing central subsidy. A total of 5595 e-buses were allocated across India in the phase-I of FAME 2. Out of this, tenders for 4520 buses were issued of which, about 2450 buses had been approved by DHI for FAME 2 subsidy by the end of FY2020.

E-bus procurement status under FAME 2 scheme

Source: UITP, DHI, JMK Research