June 8th, 2019 by Smiti on Clean Technica
The Indian government plans to incentivize cities to include electric buses to their public transport fleet through financial subsidies.
The Ministry of Heavy Industries and Public Enterprises has issued an Expression of Interest (EoI) document to invite proposals from states, government departments, transportation departments, and municipal bodies for procurement of electric buses across 40 cities. The subsidy will be provided under the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles in India or the FAME-II scheme.
The central government will offer subsidies worth Rs 2,500 crore (US$360 million) for the deployment of 5,000 electric buses. Under the current exercise, a total of 40 cities shall be selected where a subsidy will be distributed for deployment of electric buses based on population.
Cities with a population of more than 4 million must deploy a minimum of 300 electric buses each, those with more than 1 million population must deploy at least 100 electric buses each. 50 electric buses each shall be deployed in cities under other categories. In order to be eligible for the subsidy, cities must guarantee that each bus slot will run for at least five lakhs km during its contract period and also inform about the number of buses they plan to deploy.
Eligibility for this subsidy scheme will be limited to states with a separate electric vehicles policy and other incentives to promote use of electric vehicles. State transportation units will be required to submit competitive bids to access the financial subsidy.
Among other conditions for disbursement of the subsidy is that the manufacturer of the electric buses must be an Indian company with a manufacturing facility in the country. The subsidy shall be disbursed in a phased manner with 20% issued at the time of signing the supply order for the buses, 40% at the time of delivery of the buses, and the balance 40% after six months of successful commercial operation of the buses.
The timeline set for the complete delivery of all buses has been set at just over 18 months from now.
The FAME-II scheme has been designed by the Indian government to support electrification of public and shared transportation. The total budgetary allocation for this scheme is Rs 10,000 crore (US$1.4 billion). Around 35% of this allocation has been set aside to facilitate deployment of 7,000 electric buses across various cities in the country.
A number of state transportation agencies have already announced plans to induct electric buses to their fleet. These include agencies in the cities of Mumbai and Bengaluru. The state of Kerala recently issued a tender to lease 1,500 electric buses for a period of 10 years.
The Indian government is pushing for a widespread electrification of the transportation system. It has first targeted the public and shared transportation system. We recently reported that the government may ban sale of three-wheelers using internal combustion engines by March 2023 and all two-wheelers using internal combustion engines with less than 150 cc by March 2025, and that cab aggregators like Uber and Ola Cabs may be required to have at least 40% electric vehicles in their fleet by 2026.
Uber and Ola, both backed by Softbank Group, would need to start converting their fleet as early as next year to achieve 2.5% electrification by 2021, 5% by 2022, 10% by 2023 before hiking it to 40%, according to the person and the records reviewed by Reuters.
Some taxi players, like Ola, have previously attempted to operate electric cars in the country, but with little success given inadequate infrastructure and high costs.
New Delhi, however, is looking to push the new policy to boost the adoption of electric vehicles (EVs) as it tries to bring down its oil imports and curb pollution so it can meet its commitment as part of the 2015 Paris climate change treaty.
Indian think-tank Niti Aayog, chaired by Prime Minister Narendra Modi and which plays a crucial role in policymaking, is working with several ministries on the EV policy.
The recommendations will eventually become a formal policy, with or without changes, subject to approval by the federal government, the source said, adding the idea is to “push electrification through public transport.”
Neighboring China, home to the world’s top auto market, is already leading the world in electrification by setting tough EV sales targets for car makers and offering incentives to taxi operators to increase their fleet of clean-fuel cars.
EV sales in India grew three-fold to 3,600 in the year ended March but still account for about 0.1% of the 3.3 million diesel and gasoline cars sold in the country over the period, industry data showed. China’s electric car sales, meanwhile, rose 62% in 2018 to 1.3 million vehicles.
In a meeting in New Delhi on May 28, Niti Aayog officials and the ministries of road transport, power, renewable energy and steel, as well as the departments of heavy industries and trade, were among those recommending taxi operators in India gradually convert to electric.
They also recommended that all new cars sold for commercial use should only be electric from April 2026, a change that would also apply to Uber and Ola, said the person who has direct knowledge of the matter but spoke on condition of anonymity.
Motorcycles and scooters sold for commercial purposes, like food delivery or for use by e-commerce companies, will also need to be electric from April 2023, the person added.
India has seen a boom in food delivery apps like Zomato and Swiggy, which counts Naspers and Tencent as investors. Sales by e-commerce firms like Amazon.com and Walmart-owned Flipkart are also rising.
The committee has also suggested a plan to gradually introduce electric buses within cities, with 5% of the fleet electric by 2023, rising to 30% by 2026. Thereafter all new city buses would need to be electric.
Companies like Tata Motors and Ashok Leyland manufacture buses for intracity travel in India.
The EV proposal comes weeks after the inter-ministerial committee recommended electrifying most motorbikes and scooters for private use and all three-wheeled autorickshaws within the next six to eight years.
While there are several electric scooter manufacturers in the country including Ather Energy, Hero Electric and Okinawa, there are only two car makers that build and sell electric cars – Mahindra & Mahindra and Tata Motors.
Some taxi operators have so far had little success operating electric cars in India. Ola launched a pilot project in the central Indian city of Nagpur in 2017 but a year later drivers, unhappy with long wait times at charging stations and high operating expenses, wanted to return to gasoline cars.
Ola, however, is not giving up yet.
Its Ola Electric Mobility unit in March raised 4 billion rupees ($58 million) from investors including venture capital funds Tiger Global and Matrix Partners.
It also raised $300 million from Hyundai Motor and Kia Motors and formed a strategic partnership with the South Korean duo to help build India-specific EVs.
Modi’s government in 2017 had set an ambitious target to electrify new cars and utility vehicles by 2030 but resistance from the industry forced it to scale back the plan.