Last week, the Cabinet approved a plan to supply 10,000 electric buses to 169 towns and cities over 10 years, at a cost of ₹57,613 crore, of which ₹20,000 crore will be forked out by the Centre. The States are expected to run the bus services and pay an agreed sum to the bus operators, for which they will receive a subsidy from the Centre. This PPP arrangement marks a salutary step towards cleaning up the air of cities — where ramshackle buses and other contraptions on wheels belch out noxious fumes in complete violation of all emission standards. These buses will ply in cities with a population of over 3 lakh as per the Census 2011.

Quite apart from the obvious benefits of this policy move such as cleaning up the air in cities and reducing emission, the best part about the e-bus plan is that it will give a demand boost to the PLIs in advanced batteries. A large market for refining rare minerals and making battery packs could lead to a revival of investor interest in battery manufacture, while more bus makers could enter the fray, reducing costs through scale economies and more competition. States, however, could be advised to standardise their orders to keep costs down.

The decongestion effects as well as the return on investment will be higher if buses were to be at the forefront of this transition. Every rupee invested — right from the power required to run these vehicles, the battery development costs and the making of the bus — will benefit more travellers. This resource efficiency becomes important, given the reliance on imported lithium in battery-making. To the extent that the electricity used to power EVs is generated from coal, it again makes sense to prioritise mass transport. A subsidy push for buses and trucks — trucks are by far the dirtiest actors in the transport sector, and little progress has been made on the EV front — with the same being slightly pared for private vehicles as under the latest FAME 2 norms, probably makes sense. For EVs to be wholly green, their charging stations should be solar-powered to the extent possible. India could learn a trick or two from some of China’s cities such as Shenzhen, where public transportation is entirely EV-driven.

The new plan is good for a start but it needs to be built upon. The ₹10,000 crore demand incentive under FAME 2 was unveiled in 2019 with a view to roll out over 7,000 e-buses, of which just over 5,000 are on the roads. India has about two million buses, of which about 8-10 per cent are run by State transport undertakings. The finances of State transport corporations need to be fixed, so that bus makers develop the confidence to enter into PPPs with them. An EV shift, generally speaking, is expected to achieve a 75-80 per cent reduction in imported petrol and diesel requirement, if the 2030 goals are met. Yet, buses need to be more reliable and convenient for people to take to them. With charging facilities in place and a mindset shift, e-buses can become a draw.