PM E-Drive e-bus tender second phase to electrify Mumbai with 1,500 buses, Pune with 1,000 buses, says heavy industries

NEW DELHI: The union heavy industries ministry on Tuesday announced the allocation of 2,900 new electric buses in the second phase of the PM E-Drive scheme's tender, according to a disclosure in the Lok Sabha.

The ministry confirmed that Mumbai has been allocated 1,500 e-buses, and Pune 1,000 e-buses in this phase. The decision follows a request from the Maharashtra government for this allocation, which Mint reported on 9 November.

"Other than Mumbai and Pune, in the second phase, 200 e-buses each have been allocated to Hyderabad and Ahmedabad under the PM E-DRIVE scheme," said the minister of state for heavy industries, Bhupathiraju Srinivasa Varma, in a written response.

The focus on electric buses is strategic, as they account for a substantial portion of the overall scheme's funding. The government has dedicated nearly 40%, or ₹4,391 crore, of the scheme's total ₹10,900 crore outlay towards zero-emission buses.

Domain experts highlight the high impact of this strategy. They have said that substituting electric buses for diesel buses is more impactful in reducing vehicular emissions than replacing, for instance, two-wheelers. That is because buses operate throughout the day over long distances, while private vehicles, such as scooters, are only used during some parts of the day.

The PM E-Drive scheme, which replaced the decade-long FAME I and II schemes from FY15 to FY24, incentivizes the sale of electric vehicles, including two-wheelers, three-wheelers, buses, and trucks. Under the scheme, manufacturers sell vehicles at a discount and are later reimbursed by the government.

The scheme, which has been operational since March 2024, has disbursed ₹1,634.62 crore in incentives as of 23 November, according to a separate Lok Sabha disclosure.

Initially set for two fiscals, the government extended the PM E-Drive scheme’s tenure in August. It will now lapse in March 2026 for electric two and three-wheelers, but will continue until March 2028 for the more capital-intensive e-trucks, e-buses, and electric/hybrid ambulances.

The announcement for Phase Two comes as the previous tender for 10,900 e-buses in five cities—Delhi, Ahmedabad, Surat, Hyderabad, and Bengaluru—was delayed. The first phase was initially held up because the e-bus infrastructure in the states was not ready, and there were stringent contract conditions, and later, due to the festive season.

Despite the delays, major manufacturers like Tata Motors, PMI Electro, and Volvo Eicher are among the 16 bidders for the first tender. India's e-bus adoption has been increasing, with a 37% rise in H1 FY26 compared to the previous year. CareEdge Ratings projected in March 2025 that India's e-bus sales could hit 17,000 units per year by FY27, driven by government incentives and payment security schemes.