The Foundation for Economic growth and Welfare (EGROW Foundation) – a non-profit, multidisciplinary public policy organisation in collaboration with Primus Partners – India’s leading home-grown consultancy firm – today released a comprehensive study: Retrofitting of Inter-City Diesel Passenger Buses: An Economic Analysis and Policy Prescriptions.
The report showcases the economic and environmental incentives of retrofitting diesel-operated buses that contribute heavily to carbon emissions. As per the report, a standard retrofit on a 9-meter bus reduces the cost per kilometre by approximately 34.48% compared to an ICE bus. If India retrofits 20,000 buses annually, it can save about 500,000 tons of diesel and reduce crude oil imports by 12.7 million barrels yearly. The industry can also contribute substantially to India’s goal of creating 30-35 million new green jobs by 2047.
The global e-mobility market has shown significant growth, rising from 2 million vehicles in 2016 to 7.2 million in 2019, reflecting a 30% increase in just three years. The report’s data was gathered by EGROW of industry pilots of bus operations between Mumbai and Pune, a route spanning approximately 150 km. The research focused on the detailed comparison of ICE buses and EVs to evaluate the costs and benefits of EV retrofitting for diesel-operated buses and understand the need for a scaled pilot implementation of EV retrofitting.
Commenting on the findings, Dr. Charan Singh, Chief Executive Office at EGROW Foundation and Mr Davinder Sandhu, Chairperson, Primus Partners in their foreword write, “The economic benefits of this approach are profound, extending beyond mere financial savings to broader economic revitalization and environmental improvements. Retrofitting offers a pragmatic solution, leveraging existing infrastructure while transitioning towards cleaner mobility. It represents a critical step towards sustainable urban transport, demonstrating how innovation and policy alignment can drive tangible progress.”
The joint report notes the number of Indian buses is expected to reach 3 million by 2030, which requires a shift to greener technologies, particularly in pollution-intensive domains like transport. The comprehensive analysis advocates an integrated strategic approach involving policy reforms, financial support from the government and technological advancement to overcome the barriers of retrofitting diesel buses.
Key findings of the report
An ICE bus costs more than Rs29/- per km, while an electric one costs Rs 28/- per km. In contrast, a 9-metre retrofitted bus costs Rs19/- per km, a 12-metre retrofitted bus with two batteries costs nearly Rs 22/- per km and a 12-metre retrofitted bus with three batteries costs marginally more than Rs 23/- per km. Thus Retrofitted 9-meter buses are 32.1% more cost-effective than a new EV bus. The 9-metre retrofitted bus is the most economical option.
Retrofitted buses promise major output on RoI (return on investment). For a 9-metre retrofitted bus with an extended life of 10 years, the cost per km declines to less than Rs15/-. Using the same calculation, the cost per km for a 12-metre bus with two batteries is less than Rs17/- and less than Rs19/- for a 12-metre bus with three batteries.
More than 75% of domestic electricity currently comes from coal-based thermal power. To execute an effective decarbonisation strategy for India’s transport sector, the electricity used in the retrofitted buses must come from renewable sources rather than fossil fuels.
Retrofitting ICE buses to EVs will create new job opportunities. The state transport undertakings (STUs) employed 640,690 people in 2020-21, with an average of 5.63 employees per bus, including 4.46 traffic staff such as drivers, conductors, and supervisors. Additionally, 84,818 workers involved in repair and maintenance can retain their jobs through reskilling and upskilling. Retrofitting is projected to add 6000-7000 direct jobs and 36,000-42,000 new indirect jobs over the next few years.
Policy recommendations
The findings recommend specific policies to increase retrofitted bus numbers in India. Implementing a scaled pilot project aimed at converting existing ICE buses into EVs across different regions is an important step.
Revisiting and modifying the existing vehicle scrapping policy to substantially reduce re-registration fees for retrofitted EV buses will encourage the reuse of older diesel vehicles.
The government should subsidise retrofitting of old diesel buses in coordination with state governments, offering State Road Transport Undertakings subsidies to increase the ROI for retrofitting projects.
The government should also incorporate retrofitting incentives into the FAME (Faster Adoption and Manufacturing of Electric Vehicles) policy to boost EV adoption.
On the monetary side, rebating GST norms for retrofitting vehicles and used components is critical to spreading awareness. State-level Retrofit EV Policies should be introduced to support retrofitting, including interest rate subsidies and charging infrastructure development.