In a significant stride towards achieving the ambitious target of net-zero emissions by 2070, set by the Government of India, Union Minister for Environment, Forest and Climate Change, Bhupender Yadav, emphasized the crucial role of decarbonizing the transport sector.
Speaking at a side event on the India-US ‘Payment Security Mechanism (PSM)’ for e-buses, the minister underscored the importance of transitioning to electric vehicles (EVs), particularly prioritizing electric buses for mass public transportation.
Minister Yadav acknowledged the challenges faced by Public Transport Authorities (PTAs) in adopting e-buses due to high upfront costs and lower revenue realization. He highlighted the significance of the India-US PSM for e-buses as an incentive for both Indian and international OEMs/Bus operators to participate in e-bus operations. This mechanism aims to potentially establish a manufacturing hub in India, contributing to the growth of the e-bus industry and exports.
The initiative was reaffirmed during Prime Minister Narendra Modi's visit to the USA, where the India-US Government Joint Statement on the development of the ‘Payment Security Mechanism (PSM)’ was released. The objective is to facilitate the deployment of 10,000 made-in-India electric buses, aligning with India's commitment to reducing carbon emissions in the transport sector.
Secretary John Kerry, US Special Presidential Envoy for Climate, lauded the PSM, stating that it represents a significant step towards helping India electrify its bus fleet. He emphasized that this collaborative effort is not only an Indian solution but also a strategic move to maximize opportunities for decarbonizing the transportation sector.
India's efforts to drive structural change in the transportation sector include electrifying the public transport ecosystem, with a current bus fleet of 1.5 million, predominantly running on diesel. Following successful pilots and a federal subsidy program, India initiated a large tender for 5,450 e-buses worth over $1 billion, spread across five states. Encouraged by the success, the government has set a target of 50,000 e-buses, with 12,000 in different stages of contracting.
The session aimed to discuss the joint US-India collaboration to establish a payment security mechanism, addressing current constraints. With contributions of $240 million from the Government of India and $150 million from the US government and their partners, the PSM guarantees delayed payments from financially constrained state bus companies. The PSM aims to unlock up to $10 billion in non-recourse lending to e-bus manufacturers in India, facilitating the deployment of 38,000 buses.
The initiative is poised to encourage private sector participation in the procurement and operation of e-buses, contributing to a greener and more sustainable future for India's transportation landscape.
