Govt mulls partial credit guarantee, interest subvention support for pvt sector electric bus, truck adoption

New Delhi: The heavy industries ministry is mulling ways to help private bus and truck operators finance electric vehicles, through loan guarantee schemes and interest subsidies, as the government tries to spread its clean-mobility push beyond state-run fleets to the commercial sector that dominates the country's roads.

Mint reported on 4 January that the scheme could be rolled out in 6-12 months.

Key support mechanisms under consideration included Partial Credit Guarantee schemes to de-risk lending by financial institutions, as well as Interest Subvention mechanisms aimed at reducing the cost of borrowing for private sector buyers, the ministry said in a statement.

The private sector assumes importance here, since it operates about 90% of the country’s two million buses.

To be clear, the government’s flagship electric vehicle schemes, such as FAME, PM E-Drive, and PLI-Auto, have contained incentives to reduce the upfront cost of e-buses. PM E-Drive scheme also allocated ₹500 crore out of its ₹10,900-crore corpus towards electric trucks.

However, these e-bus incentives were only for government-run bus fleets. According to domain experts, supporting the rollout of electric public transportation and freight transportation is the next frontier in India’s clean mobility advancements.

“India has made significant progress in electrifying public buses through schemes such as FAME, PM E-DRIVE, and PM eBus Sewa. These initiatives have created strong momentum for clean urban transport. However, achieving scale will require a clear focus on electrifying private bus fleets as well. In this context, access to financing will be a critical enabler, not only for buses but also for accelerating the electrification of trucks across the country,” said Amit Bhatt, India managing director, International Council on Clean Transportation (ICCT), a think tank.

A heavy industries ministry statement on Wednesday said it consulted with the department of financial services, World Bank (India), non-banking finance companies, Small Industries Development Bank of India (Sidbi), National Investment and Infrastructure Fund (NIIF), and manufacturers and operators of buses and trucks.

E-buses and e-trucks currently cost two-and-a-half to three times more than diesel-fuelled counterparts, making financing a critical constraint for adoption, particularly among private operators who dominate intercity and commercial routes.

“Public transport, particularly buses, forms the backbone of mobility across India, while trucks play a critical role in freight movement by carrying a substantial share of domestic goods,” the ministry said. At the same time, the commercial vehicle segment contributes significantly to road transport emissions, fuel consumption, and particulate matter pollution, it added.

The Union government’s e-bus demand aggregation agency Convergence Energy Services Ltd concluded in November 2025 the country’s largest ever e-bus tender under the PM E-Drive scheme for 10,900 e-buses across five metropolitan cities. India’s e-bus sales totalled 4,985 units in FY26, up 50% from 3,315 units in FY25.