India and the US have established a joint finance mechanism totaling USD390m to ramp up production of electric cars in India, as reported by Bloomberg on December 10. With USD150m contributed by the US government and philanthropic groups and USD240m from the Indian government, the fund will serve as a guarantee for electric bus manufacturers seeking loans for production expansion. Leveraging the joint finance mechanism, India aims to have 50,000 electric buses in operation by 2027, a significant rise from 12,000 units at present.

The mechanism is poised to accelerate the adoption of electric buses in India and contribute to low-carbon transportation. The Indian government previously introduced the concept of “transportation as service”, allowing public entities to rent buses from manufacturers and make monthly payments over 12 years. While this approach allowed local authorities to spread costs, it resulted in a slowdown in production due to manufacturers grappling with uncertain returns and long-term debt. The new mechanism is anticipated to stimulate investment in the sector while mitigating financial risks for manufacturers. According to India’s electrification target for the transportation sector, 30% of newly registered private cars, 40% of buses, 70% of commercial cars, and 80% of 2-wheelers and 3-wheelers will be electric by 2030.

Sources:

https://www.bloomberg.com/news/articles/2023-12-10/cop28-india-s-plan-for-50-000-e-buses-on-its-roads-gets-us-support

https://www.itdp.org/2023/08/09/how-this-state-in-india-is-envisioning-a-future-for-electric-vehicles/