Credit rating agency ICRA estimates that e-buses will comprise 8 per cent-10 per cent of new bus sales by FY25.

Furthermore, it asserted that this particular segment will lead the light of India’s electrification movement and is hence witnessing formidable traction as of now.

The central government’s Faster Adoption of Manufacturing of Hybrid and Electric Vehicles (FAME) initiative has already been lengthened by two years until 2024.

This initiative has set the wheel rolling for broader promotion of this segment in the medium term. This growth is despite the fact that there has been visible stress in the public transportation market over the last year and a half.

Yet, the ICRA noted that there had been an uptick in the e-bus segment in the past few months.

“Bus costs are the single largest cost element in electric bus projects, accounting for 75-80 per cent of project costs,” Srikumar Krishnamurthy, Vice President of ICRA Ratings, was quoted in a report by The Economic Times.

Krishnamurthy added, “With the capital subsidy of Rs 35-55 lakh per bus under the FAME II scheme, the capital subsidy element can fund a large part of the project costs, up to even 40 per cent, which augurs well for the viability of these projects.”

The agency also claims that because FAME-II rolls out capital subsidy only for buses through the gross-cost contract (GCC) model, it has become the preferred route for adopting electric buses in India.