Auto & Transportation / By Mahesh Babu / February 2, 2023

The recent innovation in public mass transportation space has been India's first electric double-decker.

India is among the fastest-growing economies, with the urban population expected to reach 675 million by 2035. The mounting urbanization is resulting in the increased use of motorized vehicles on the roads, putting a strain on the limited available resources in cities. Though communities are becoming more conscious and pragmatic toward non-motorized modes of transportation, public transport continues to remain the preferred choice for commuting in India. Approximately 18% of the population uses public transport services every day, with buses constituting over 70% in larger cities.

Bus dynamics in public transportation

India is the world’s second-largest bus market after China, with approximately 90,000-100,000 units sold per annum. However, India has only 1.2 buses per 1,000 people. The Indian bus market is primarily driven by the private sector, which accounts for 70%, while State Transport Units [STUs] account for the rest. With more than 95% of buses sold in India being diesel-powered, the Indian electric bus market is set to grow at a rapid pace to become almost ten times its current size in the next five years, given the growing demand from state and central governments as well as greater acceptance and adoption in private space.

The advent of electric buses

While India’s EV adoption is nascent in the CV space with less than 5% electrification in the bus market, the Government of India has taken numerous steps for a strong push for greener mobility through diverse incentives and schemes like FAME-II [Faster Adoption and Manufacturing of Hybrid and Electric Vehicles], PLIs [Production Linked Incentives] and ensuring a roadmap for the development of charging infrastructure. The recent Convergence Energy Services Limited [CESL] tender for electric buses covering six Indian states and Union Territories – Delhi, Telangana, Haryana, Gujarat, Kerala, and Arunachal Pradesh, testifies to the accelerated adoption of electric buses across the country.

Further supporting the EV adoption, is the gross cost contract [GCC] model to address the challenges of capital cost compared to ICE vehicles. In the GCC model, the OEM partner is compensated on a per-km basis for procuring, operating and maintaining city buses, in the form of a service contract, thus reducing the economic pressures on STUs. Hence, such public-private partnerships through a contract spanning 10-12 years, is a win-win scenario for all the stakeholders – STUs, OEMs, government, and the public. As per a recent study, ‘Wet-lease’ buses under the gross cost contract [GCC] model have helped Brihanmumbai Electric Supply and Transport [BEST] reduce losses by more than INR 400 crore in a year, and the cost per kilometre for BEST buses in Mumbai has decreased by 30% in recent years.

Innovation through products

Given the growing public transportation needs of the country due to increased urbanization, innovative and sustainable products are becoming the need of the hour. The recent innovation in public mass transportation space has been India’s first electric double-decker. This iconic bus serves as the ideal solution for city transportation, contributing to 41% lesser space on the road, offering higher passenger capacity per footprint, with 86% more passengers for only an 18% increase in weight, and 36% less energy consumed per passenger. Given the value proposition in terms of sustainability and footprint, this innovative product will see increased deployment across the country.

Innovative solutions through technology

A modernized public transport journey is key to enhancing the commuting experience. Going forward, the introduction of IT-enabled solutions like data monitoring and analytics will play a vital role in improving the performance and efficiency of operations, retaining commuters, and increasing passenger trips. This can be achieved through digital bus depots, where buses are managed and maintained using digital tools and technology with real-time monitoring of fleet operations.

Subsequent steps could include the addition of charger management, trip scheduling, and geofence-based trip monitoring. These advanced features will allow transport agencies and bus operators to collect real-time critical notifications and ensure that accurate information is delivered for requisite action.

Innovation through financial models

While conventional buses are currently funded through a combination of equity and loans, funding for electric buses remains a key challenge for mass adoption. New financing models like green bonds, pivoting to increase the adoption of electric buses further, are at a nascent stage. To democratize sustainable mobility, access to a large pool of funds is a necessity. E.g., the electrification target of 70% in the bus segment, requires finances to the tune of $35 Bn. Hence, access to special funds, green funds, support, and interventions from the government is key to driving the growth of EVs in the country.

Private sector to play a key role

The private electric bus market in India is one of the key transportation markets in the country, expected to be valued at INR 60 billion in the next five years. Collaboration by OEMs with private players and companies looking at electric buses for staff transportation, as part of their shift to sustainable mobility in the near term, is a testament to the growing interest in the private sector.

The way-forward

While the current government subsidies are playing a key role in driving the initial e-bus adoption in the STU segment, the private sector will see a step up for sustainable transportation. Going forward, newer segments like feeder services will emerge for last-mile mobility, to cater to short intra-city applications. Another key factor that will go a long way is enhanced awareness of the financial benefits of green bonds and special funds, amongst issuers, investors, and policymakers. Furthermore, advanced technology and affordable solutions that enhance the mass transportation experience hold a large potential to transform the way commuters accelerate their journeys in the future.

Mahesh Babu, Chief Executive Officer – SWITCH Mobility Ltd.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

Courtesy: ET Insights