India's largest e-bus tender under PM E-Drive scheme deferred again amid lack of state infrastructure, high bidding cost
During the initial discussions, busmakers had flagged that the earnest money of over ₹312 crore to be deposited to participate in the tender for all five cities was too high. Additionally, some of the tender conditions were too stringent.
New Delhi: Bidding for India's largest e-bus tender under the marquee PM E-Drive scheme has been extended once again due to concerns of companies and states over the lack of adequate charging infrastructure in depots and the high cost of participation in the tender.
The last date for submission of bids was originally 12 August. This was deferred to 14 October and now to 6 November, according to publicly available tender documents. The delay in bid submission was due to the lack of adequate infrastructure for e-buses and the stringent conditions that busmakers had to meet, three people aware of the developments said.
The tender is for 10,900 e-buses in New Delhi, Bengaluru, Hyderabad, Ahmedabad and Surat on a per-kilometer basis. Under this gross cost contract (GCC) model, the buses will be owned by the manufacturers while the state transport agencies pay to operate and maintain them.
The tender issued by Convergence Energy Services Ltd (CESL) opened in June this year, after the heavy industries ministry announced that these five cities would receive 10,900 e-buses at subsidised cost under the PM E-Drive scheme. CESL did not mention a reason for extending the deadline.
About ₹4,391 crore, or 40% of the PM E-Drive scheme's total outlay of ₹10,900 crore was allocated towards incentivising e-buses. With no progress in distributing these funds till date, the scheme’s original deadline of March 2026 was pushed to March 2028.
During the initial discussions, busmakers had flagged that the earnest money of over ₹312 crore to be deposited to participate in the tender for all five cities was too high, one person aware of the discussions between the government and busmakers said on condition of anonymity.
The second person said the tender conditions were too stringent and included limitations on exits of investors in the busmakers and operators, preventing changes in ownership.
Complicated process
“Overall, the entire process has become more complicated than it needs to be," said this person, requesting anonymity. “It is surprising why the tender has become so complicated over time. They need to make it simple and reduce the amount of money blocked in the system."
The bidders also have to furnish a bank guarantee equal to the amount of subsidy they will avail under the PM E-Drive scheme, according to the tender document. Mint reported earlier that high bank guarantees have been a hindrance to the heavy industries ministry's scheme to attract foreign electric carmakers to make in India.
The PM E-Drive scheme aims to reduce the upfront cost of procuring 14,028 e-buses in nine cities, with each bus costing about ₹1 crore. The government plans to reduce the cost of each e-bus by about ₹20-35 lakh, based on the size of the bus. The four other cities not included in this tender are Mumbai, Pune, Chennai and Kolkata.
Busmakers and operators bid for a per-kilometer price to supply e-buses in these cities, and the lowest bidder is awarded the tender.
The latest document showed that buses will by supplied in a staggered manner, while earlier the earlier document had no such provision. For instance, the 2,000 buses in Hyderabad will be supplied in two lots of 1085 units and 915 units. New Delhi will have two lots of 1,400 buses each, and Bengaluru will have three lots of 3,500 units, 600 units, and 400 units. The other cities will have a single lot.
“Bus manufacturing and operating of bus fleets are actually completely different businesses requiring different skillsets and cash flows. EV bus technology and costs are evolving by the day, while the requirement is to commit a large number of buses for a long period of time. The current CESL tender framework is challenging for the aspirants. A more flexible approach for next few years may be more practical," said Anurag Singh, an advisor at Primus Partners.
The second person said infrastructure for e-buses in these cities needs to be ramped up.
“Also, infrastructure needs to be ready otherwise the manufacturers cannot deploy buses, and this causes huge losses," the second person said.
The third person said: “Depots, charging stations – everything needs to be built before the actual bus rollout, and this is causing delays in the tender."
According to Niti Aayog's index of states' progress in electric mobility for 2024 (launched in August 2025), Karnataka ranked second in EV charging infrastructure readiness with a score of 74/100, while Delhi ranked seventh with 62/100. Gujarat was 18th with 44/100, while Telangana was 27th with 26/100.
The index evaluates states on the basis of charger-to-vehicle ratios as well as state policies for charging infrastructure development. However, the index counts public chargers only – not those at depots where buses are parked. It covers all EV charging infra – including that for 2W, 3W, which cannot sustain e-buses and e-trucks.
Cleaner vehicles
Email queries to state-run CESL which is running the tender, the heavy industries ministry, EV makers Tata Motors Ltd, JBM Auto Ltd, Olektra Greentech Ltd, Switch Mobility Ltd and the state governments of Delhi, Telangana, Karnataka and Gujarat seeking comment on the matter on 21 October remained unanswered till press time. EKA Mobility and PMI Electro Mobility Solution Pvt Ltd declined to comment.
The persistent policy push towards electric public transportation has three goals – reducing vehicular emissions on Indian roads, reducing the country’s fuel import bill, and building a robust domestic supply chain for manufacturing of cleaner vehicles.
The PM E-Drive scheme will provide incentives only to those buses that meet its localisation criteria stated under the phased manufacturing programme (PMP), a list of components that manufacturers are allowed to import till a cutoff date. The government on 30 September tweaked the PMP for e-buses and e-trucks under the scheme to allow imports of rare earth magnet-laden traction motors till supply of these magnets resumed from China.
China controls about 90% of the world’s rare earth magnet supply. The halt in exports hindered e-bus production in India. Tata Motors’ commercial vehicle business lost significant market share this year. Mint reported on 15 October that the company sold a little over 200 units in the January-September period this year, down 80% from the year before.
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