PM EBus Sewa And The Future Of Urban Bus Governance In India

Policy Update
Paridhi Passi

Background

India’s urban transport system has a gap that has been ignored for far too long. Most mid-sized cities do not have organised bus services, and people are left depending on autorickshaws or private vehicles which are expensive and add to pollution and congestion. Daily wage workers and low-income groups suffer the most since they have no affordable option.

This is not a new problem. The Jawaharlal Nehru National Urban Renewal Mission in the 2000s did fund some buses, but those aged out without replacement and nothing serious followed. State transport corporations were running at losses, private players stayed away because city bodies rarely paid on time, and the situation kept getting worse in the cities that needed help the most.

PM eBus Sewa was approved on August 16, 2023 by the Ministry of Housing and Urban Affairs to address this. The scheme aims to deploy 10,000 electric buses in cities that lack organised bus services through a public-private partnership model, so that city governments do not have to carry the full financial burden. The total estimated cost is Rs. 57,613 crore, with central support of Rs. 20,000 crore covering bus operations for 10 years or up to March 2037, whichever is earlier. Charging infrastructure is funded 100 percent by the Centre. The scheme covers cities with populations between 3 and 40 lakh as per the 2011 Census and all state and UT capitals, with priority given to cities that currently have no organised bus network at all.

Figure 1: PM eBus Sewa scheme infographic highlighting key objectives, financial outlay, and planned deployment of electric buses.

Source: PM eBus Sewa Official Portal, Ministry of Housing and Urban Affairs, Government of India.

Functioning

The way PM eBus Sewa is structured is quite different from older bus schemes where the government simply bought buses and handed them to state transport corporations. Here, the scheme runs on a Gross Cost Contract model. Private operators or bus manufacturers procure and operate the electric buses themselves. The city’s Public Transport Authority does not pay any upfront cost. Instead, it pays the operator a fixed amount per kilometre operated — Rs. 24 per km for standard 12 metre buses. This model shifts the capital burden away from city governments, many of which do not have the financial capacity to buy and maintain large bus fleets on their own.

The bigger challenge the scheme had to address was the risk of payment defaults. State transport bodies in India have historically been poor at making timely payments to contractors. This had been the main reason private players were reluctant to enter city bus operations in the past. The scheme deals with this through a Payment Security Mechanism, which was formalised as a separate Cabinet-approved scheme in October 2024 with an outlay of Rs. 3,435 crore.

Under this, Convergence Energy Services Limited acts as the central implementing agency and manages a dedicated fund. If a city’s transport authority defaults on its monthly payment to the bus operator, CESL pays from this fund and then recovers the money from the defaulting authority. If even that recovery does not happen within 90 days, the Reserve Bank of India can invoke a Direct Debit Mandate to deduct the amount directly from the state’s account. By December 2025, 19 states and union territories had submitted consent for this mechanism.

The scheme also goes beyond just deploying buses. It includes accessible bus stops, Intelligent Transit Management Systems for real-time tracking of buses, and National Common Mobility Card based ticketing so passengers can pay seamlessly.The scheme also includes provisions for accessible buses equipped with wheelchair ramps or lifts.

Performance

Since its launch in August 2023, the scheme has moved forward on the administrative side though the number of buses actually running on roads remains small.

Table 1: Key Progress Indicators under PM eBus Sewa (as of February-March 2026)

Indicator	Status
Total buses sanctioned	10,000 across 116 cities, 20 states and 6 UTs
Letter of Award issued	5,212 buses across 71 cities
Concession Agreements signed	2,730 buses across 32 cities
Cities where operations have started	4 — Guwahati, Bhavnagar, Nagpur, Chandigarh (February 2026)
Total infrastructure sanctioned	Rs. 1,254 crore
Total infrastructure spent	Rs. 483 crore (as of December 2025)
PSM Fund disbursed to CESL	Rs. 500 crore (FY 2025-26)

Source: PIB, Ministry of Heavy Industries, pm-ebus-sewa.mohua.gov.in

Maharashtra has received substantial infrastructure sanctions. The first four cities to actually begin bus operations in February 2026 were Guwahati, Bhavnagar, Nagpur, and Chandigarh. The fact that these cities moved faster than others points out to the role administrative capacity plays in implementation, cities that were better organised simply got things done quicker.

Figure 2: State-wise Bus Allocation under PM eBus Sewa (as of July 2025)

Source: Lok Sabha Unstarred Question No. 2577, Ministry of Heavy Industries, July 2025

Impact

PM eBus Sewa has the potential to improve affordable and reliable public transport in mid-sized cities that currently lack organised bus services, particularly benefiting low-income commuters, students, and daily wage workers. By promoting electric buses, the scheme also supports cleaner urban mobility and could help reduce pollution in rapidly growing cities.

The scheme’s GCC model and Payment Security Mechanism may encourage greater private sector participation in urban transport by reducing the financial risks that have historically discouraged investment. At the same time, the programme is pushing cities to adopt modern systems such as digital ticketing, Intelligent Transit Management Systems, and accessible transport infrastructure, contributing to broader improvements in urban mobility governance.

Emerging Issues

The most visible problem is the gap between what has been sanctioned and what is actually running. All 10,000 buses have been sanctioned on paper, but concession agreements have been signed for only 2,730, and only four cities had operational buses nearly two and a half years after the scheme launched. This is a significant lag.

Infrastructure readiness is a major reason for this delay. Buses under this scheme cannot be deployed until charging depots are ready, and several states including Haryana, Karnataka, Meghalaya, and Uttarakhand had spent nothing on depot infrastructure despite having received bus allocations. Of the Rs. 1,254 crore sanctioned for infrastructure, only Rs. 483 crore had been spent by December 2025.

State participation has also been uneven. Two eligible cities in Telangana, Warangal and Nizamabad, have not joined the scheme at all. More broadly, some states have moved quickly while others have barely progressed beyond the allocation stage, which raises questions about whether the weaker states will catch up.

There is also a capacity problem at the city level. The scheme targets cities without organised bus services, but these are often the same cities with the least experienced urban transport administrations. Managing a GCC based PPP contract, coordinating land acquisition for depots, overseeing ITMS systems, and fulfilling the scheme’s compliance requirements demands institutional capacity that many smaller city bodies do not have.

Way Forward

PM eBus Sewa is a more seriously designed scheme than what India has seen before in urban bus transport. The PPP model with a payment security backstop addresses the structural problem that has kept private investment out of city bus operations for decades. The early operations in four cities show that the model works when the administrative groundwork is in place.

The focus now needs to shift to closing the gap between sanctions and actual deployment. Smaller cities with weak governance capacity may need direct technical assistance from the Centre to manage contracts and compliance. The PSM scheme will ultimately determine whether PM eBus Sewa scales to its full potential if private operators find the payment guarantee credible, it could bring in investment in city bus operations at a scale India has not seen before.

References

Ministry of Housing and Urban Affairs. (n.d.). PM eBus Sewa Official Portal. Government of India. https://pm-ebus-sewa.mohua.gov.in
Press Information Bureau. (2023, August 16). Cabinet approves PM-eBus Sewa. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1949430
Press Information Bureau. (2025, February 13). Status of PM eBus Sewa Scheme. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2102861
Press Information Bureau. (2026, March 10). PM-eBus Sewa PSM Scheme Progress. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2237554
Ministry of Heavy Industries. (2025, July). Lok Sabha Unstarred Question No. 2577. Government of India https://heavyindustries.gov.in/sites/default/files/2025-08/lsauq_2577.pdf

About the Contributor

Paridhi Passi is a Research & Editorial Intern at IMPRI and a Political Science (Hons.) student at Daulat Ram College, University of Delhi. Her academic interests lie in public policy and governance.