Interest subvention scheme likely for e-buses, e-trucks
Economic Times, 25 May '26
The government is considering an interest subvention programme aimed at encouraging the adoption of electric buses and electric trucks within the private sector, according to officials familiar with the matter.
The proposed scheme, which is currently under discussion, seeks to support the deployment of 50,000 electric buses and 10,000 electric trucks through an interest subvention of approximately 3%-5%, the officials stated.
"A tapering interest rate subvention of 3%-5% is being considered to support the procurement of electric trucks and electric buses," a senior official told the press. The Centre may allocate Rs. 57.60 billion (US$ 605 million) towards supporting the purchase of electric buses and Rs. 12 billion for electric trucks, the official further added. The Ministry of Heavy Industries this week held discussions with stakeholders, including banks and fleet operators, regarding the proposal.
The proposal is being discussed amid the West Asia crisis, which has contributed to rising oil prices, alongside Prime Minister Narendra Modi's call to reduce fossil fuel consumption. The government is evaluating additional measures to support commercial electric vehicles through this intervention. "Electric buses and electric trucks require higher investment compared to diesel variants," said an official who attended the meeting.
According to industry estimates, a diesel bus can be purchased for approximately Rs. 6 million, while a comparable electric bus costs around Rs. 12 million. Similarly, a 55-ton diesel truck is estimated to cost Rs. 5.8 million, whereas a comparable electric truck costs approximately Rs. 12.2 million.
A partial credit guarantee mechanism and interest subvention are being considered as the two components of the proposed scheme. It is estimated that government support could potentially result in between Rs. 700 billion and Rs. 800 billion in private investment for the procurement of electric buses and electric trucks.
Additional incentives, including waivers on toll charges and vehicle registration fees, are also under consideration.
Industry stakeholders are also reported to have requested infrastructure status for electric buses and electric trucks, along with their inclusion under priority sector lending. A higher loan-to-value (LTV) ratio for electric buses and electric trucks, similar to that available for diesel vehicles, is also among the industry's demands.
