Bus Manufacturers Voice Concerns Over India’s Capital-Heavy E-Bus Tender Model

India’s ambitious move to electrify its public transport fleet is entering a decisive stage. As the government prepares to roll out thousands of new electric buses under the PM E-Drive scheme, concerns are emerging from within the manufacturing sector about the tender structure being followed.

The state-run Convergence Energy Services Ltd (CESL) is gearing up to open bids for 10,900 electric buses to be deployed across five key cities — Delhi, Hyderabad, Ahmedabad, Surat, and Bengaluru. Large-scale tenders for Mumbai and Pune are also expected to follow.

While these numbers reflect India’s growing commitment to green mobility, several bus manufacturers argue that the Gross Cost Contract (GCC) model adopted for the tenders presents serious challenges. The GCC framework, they say, is capital-intensive and places heavy financial and operational responsibilities on manufacturers.

Under the GCC model, state transport undertakings (STUs) procure and operate the buses over a 10-year contract period, paying manufacturers on a per-kilometre basis. The cost per kilometre is decided during the tender process and remains a determining factor in winning bids.

Manufacturers highlight that while the model aims to standardize pricing and ensure predictable costs for governments, it also requires companies to shoulder large upfront investments — including vehicle procurement, charging infrastructure, and maintenance — while returns are spread over several years. This structure, they argue, can strain liquidity and deter smaller players from entering the segment.

Industry executives also point out that the mandatory use of the GCC model under the PM E-Drive scheme removes flexibility that previously allowed state authorities and suppliers to negotiate alternative contract structures. Under the current framework, every tender issued through CESL must follow this model, leaving little room for hybrid or lease-based options that could balance risk more evenly.

Despite these concerns, policymakers defend the approach, saying it provides long-term visibility and ensures that state transport agencies do not bear the upfront financial burden. By paying operators on a per-kilometre basis, states can better manage budgets while ensuring reliable service delivery.

However, with thousands of buses slated for deployment under upcoming tenders, manufacturers warn that the sustainability of the GCC approach must be reassessed. Without adjustments to balance costs and risks, India’s electric bus revolution could slow down before it truly takes off.