Government To Introduce ‘Payment Security Management’ Structure To Promote Adoption Of Electric Buses

The Indian automotive industry has been witnessing a shift towards sustainable mobility solutions in the country. The government has also been taking active steps towards promoting electric vehicles in the country. In addition to private electric vehicles, the government has also been devising strategies to use electric vehicles for public transport such as electric buses. 

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One such instance of promoting electric public transport is the Ministry of Heavy Industries creating a Payment Security Management (PSM) formula to assist states financially in acquiring electric buses. This formula ensures that manufacturing companies supplying electric buses receive their payments without delay, and the State Transport Department isn't burdened with immediate payments for the electric buses.

Fifteen states in the country are prepared to transition from diesel to electric buses under this formula. Among these states are Gujarat, Maharashtra, Rajasthan, Madhya Pradesh, Haryana, Uttar Pradesh, Tamil Nadu, and Punjab. The ministry has drafted a cabinet note outlining the PSM formula.

Plans are in motion to replace over one lakh diesel buses with electric ones this year. However, the substantial cost of purchasing electric buses poses a challenge for state transport departments, which cannot afford to pay the entire amount all at once. 

Electric bus manufacturers are also concerned about getting paid late if they give buses on credit. The PSM formula addresses these concerns by establishing a payment structure where the manufacturing company supplies buses to state transport departments, and payments are made in installments on a monthly or quarterly basis. The state government guarantees the payments on behalf of the transport department. In case of non-payment by the transport department or state government, the payment is deducted from the state government's RBI account as all states maintain accounts with RBI. 

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Once electric buses will start being supplied under the PSM, other states are expected to follow suit and adopt electric buses in their respective territories. Currently, there are approximately 15 lakh diesel and CNG buses operating across the country, while only 4000 electric buses are in service. The budget for the current financial year also includes provisions for implementing the PSM to promote the adoption of electric buses.