India’s E-Bus Adoption to Reach 13 Percent by FY28, Says CareEdge Ratings

India’s electric bus (e-bus) penetration is expected to rise to around 13 percent of total bus sales by FY28, driven by government schemes, expanding manufacturing capacity and the growing adoption of the Gross Cost Contract (GCC) model, according to CareEdge Ratings.

E-buses accounted for nearly 4 percent of annual bus registrations in FY25 and 9MFY26, supported by policy initiatives such as PM e-Bus Sewa and PM e-Drive, along with improving charging and depot infrastructure. However, delays by State Transport Undertakings (STUs) in depot allocation and charging readiness have pushed the earlier 15 percent penetration forecast to FY28.

Currently, India has only ~8 e-buses per million people, far below the global average of about 94 per million, with adoption concentrated in metro cities like Delhi, Maharashtra and Karnataka. Deployment is now expected to expand into Tier II and Tier III cities under central government programmes.

Market leadership is shifting towards players such as Olectra, JBM, PMI and Switch Mobility, which together account for over three-fourths of recent e-bus sales. These four OEMs have a combined manufacturing capacity of around 32,000 e-buses annually and an order book of nearly 31,000 units, largely under GCC contracts.

The transition from outright purchases to the GCC (OPEX) model, where private operators procure and maintain buses while STUs pay per-kilometre charges, is improving project bankability through payment security mechanisms, escrow structures and standardised contracts. Total ownership costs of air-conditioned e-buses are now estimated to be 15–20 percent lower than diesel buses over 12 years, strengthening their economic case.

CareEdge Ratings projects annual e-bus sales to reach about 20,000 units by FY28, aided by recent government tenders including 10,900 buses finalised through CESL and fresh procurement announcements in the Union Budget. However, timely payments by STUs, grid reliability and charging infrastructure readiness will remain critical to sustaining growth.