New Delhi / Chennai: Sales of buses grew nearly 60% during April-August, showing a spurt for the first time in three years as state transport firms replaced their vehicles, new bus services started in smaller towns and cities, and the country’s road network expanded.

Bus sales in the first five months of this fiscal year grew to 15,442 units

High demand: The Delhi Transport Corporation plans to more than double its fleet to 9,000 buses by 2010.

Demand increased as several state transport undertakings, such as those in New Delhi and Tamil Nadu, decided to upgrade or modernize their fleets and also allowed private operators to ply on some routes. The government-owned Delhi Transport Corporation alone has plans to more than double its fleet to 9,000 buses by the end of the decade.

Bangalore’s Metropolitan Transport Corporation has plans to increase its fleet size by 50% to 6,000 vehicles and launch services to suburbs such as Devanahalli, 35km from the city, where a new international airport will become operational from April. Last year, it also leased vehicles from private operators for select routes to the suburbs.

“Demand has increased from private operators," said Rajive Saharia, director of sales and marketing at Ashok Leyland Ltd, India’s second largest truck and bus maker. “The number of operators is increasing and they are also strengthening their fleets."

Analysts say the spurt in growth led by private bus operators in smaller towns and cities is because of the continuing boom in call centres that need dozens of employees to be transported in shifts.

“The city bus concept did not exist in small towns and tier II cities," said Vaishali Jajoo, analyst with Angel Broking Ltd. “As infrastructure develops in these places, demand is also increasing," she added.

The demand for buses has also prompted some companies such as DaimlerChrysler to enter the market while existing players are beefing up their production and development facilities. Last year, Tata Motors Ltd, India’s largest truck maker, announced a joint venture with Brazilian company Marco Polo to make 7,000 buses a year. Chennai-based Ashok Leyland also plans to build a bus body building facility in North India.

Another reason for the increasing demand is better roads and increased connectivity. In 2006-07, nearly 15,000km of roads were completed and new connectivity provided to 3,400 habitations, notes the annual report of the ministry of rural development.

Still, analysts say growth in the sector will stabilize at 8-10% as sales of private vehicles such as cars and two-whe-elers grow and alternative systems such as local trains and overhead transport increase.

“As we move forward, demand should moderate to 8-10% over the next 10 years" with the current rate of economic expansion and infrastructure development, said S. Ramnath, vice-president, SSKI Securities Ltd.