Cabinet Approves PSM Scheme With INR 3,435 Cr Outlay To Promote Adoption Of Ebuses

As part of the Centre’s push for promoting electric mobility, the union cabinet has approved the ‘PM-eBus Sewa-Payment Security Mechanism (PSM) scheme’ with an outlay of INR 3,435.33 Cr for procurement and operation of ebuses by public transport authorities (PTAs).

The scheme aims to support the deployment of over 38,000 ebuses during FY25-FY29 period. 

In a statement, the government said that the scheme will support the operation of ebuses for a period of up to 12 years from the date of deployment.

The statement said that a majority of the buses operated by PTAs currently run on diesel/CNG. While ebuses are environmentally friendly and have lower operational costs, the high upfront cost and lower realisation of revenue from operations could make it challenging for PTAs to procure and operate ebuses.

“To address the high capital cost of ebuses, public transport authorities (PTAs) induct these buses through public private partnership on Gross Cost Contract (GCC) model. The PTAs are not required to pay the upfront cost of the bus under the GCC model, instead OEMs/operators procure and operate ebuses for PTAs with monthly payments. However, OEMs/operators are hesitant to engage in this model due to concerns about potential payment defaults,” the statement added. 

The new scheme aims to address this concern by ensuring timely payments to OEMs/operators through a dedicated fund. 

In case of any default in payments by the PTAs, the implementing agency, Convergence Energy Services Limited (CESL), would make the necessary payments from the funds under the new scheme, which could be later recouped by the PTAs and states and union territories.

Besides the PSM scheme, the Cabinet also approved the much-awaited FAME-III scheme, albeit with a different name — PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) Scheme. 

The new scheme to boost EV adoption has a total outlay of INR 10,900 Cr. Over the next two years, the scheme aims to support 24.79 Lakh electric two-wheelers, 3.16 Lakh electric three-wheelers, and 14,028 ebuses via demand incentives. 

Besides, the scheme has also set aside various amounts for the installation of public charging stations, deployment of etrucks and eambulances, among others.