Contract delays hold up 2,600 e-buses under govt scheme

New Delhi: The rollout of 2,600 electric buses under the Centre’s PM E-bus Sewa scheme has stalled across five states, with bus makers and operators considering making a representation to the government on the issue.

Letters of award (LoAs) and concession agreements (CAs) for these buses earmarked for Maharashtra, Madhya Pradesh, Bihar, Chhattisgarh and Uttarakhand are yet to be executed, according to two people familiar with the matter and a document reviewed by Mint. The government has sanctioned 10,000 e-buses under the scheme so far.

The delay has created uncertainty for bus makers and operators, given that lenders do not provide credit facilities unless they furnish the concession agreement, the first person said on condition of anonymity.

“Concession agreements are what enable bus manufacturers and operators to secure credit facilities, and LoAs are not enough for this,” said the second person.

This development comes at a time when the Centre is looking to incentivise electric mobility, with Prime Minister Narendra Modi on 10 May calling for faster adoption of electric vehicles to reduce India’s dependence on imported crude oil, which meets nearly 90% of domestic demand.

Backing electric buses

The PM E-Bus Sewa scheme, administered by the ministry of housing and urban affairs (MoHUA), aims to support the deployment of 10,000 electric buses across 116 tier-II and tier-III cities. These buses have been allocated to various cities, and about 98% of them have also been tendered.

Buses under the scheme were tendered in three parts. The first tender closed in March 2024, the second in November 2024, and the third is set to close in 2026.

The e-buses for which LoAs and CAs are yet to be inked were part of two tenders in March 2024 and November 2024 by state-run Convergence Energy Services Ltd (CESL).

LoAs under this scheme are awarded by state governments to winning bidders. After LoAs are given, the state government and the bidder, which can be a bus maker, operator, or consortium, sign a detailed contract called the concession agreement.

In a written response to the Lok Sabha in March, the ministry of heavy industries said 6,228 buses had been tendered under the PM E-Bus Sewa scheme as of February 2026.

Queries emailed to the union ministry of housing and urban affairs, state governments of Maharashtra, Bihar, Chhattisgarh, Madhya Pradesh, Uttarakhand, bus makers EKA Mobility, PMI Electro, Olectra Greentech, JBM Auto, Tata Motors, Ashok Leyland and CESL on 2 June remained unanswered till press time.

Need to be better prepared

According to domain experts, municipal authorities should be better prepared when new e-buses ply. “Some cities under the PM E-bus Sewa scheme are ones where there was no government public transportation. In such cases, the entire ecosystem – including municipalities, technicians, aftermarket services, and even manufacturers, has to take extra precautions and be prepared,” said T. Surya Kiran, former director of Central Institute of Road Transport, Pune.

While e-buses have begun operating in some cities, many local bodies may still lack the technical and service infrastructure needed to manage breakdowns and maintenance effectively, he said, adding that greater digital oversight is required.

The heavy industries ministry is currently working on a new scheme to ensure easier financing for commercial electric vehicles – buses and trucks – as it seeks to extend EV adoption beyond state-run transport fleets into the private sector.