India is one of the most populated countries in the world, and the strong economic growth and the rise in disposable income in the past few years has resulted in an extensive adoption of vehicles in the country. This has also led to the surging levels of pollution in the country, making it one of the most polluted countries across the globe. Attributed to this, the requirement for electric vehicles in the country is increasing as well. People are becoming increasingly aware regarding the surging air pollution levels and hence are trying to opt for electric vehicles instead of the conventional fuel-based vehicles.

The government of the country is also taking several initiatives in order to curb the air pollution levels. One of the recent ventures is the step towards electrifying the public transport fleet in India, due to which the requirement for electric buses is growing. The Ministry of Heavy Industry and Public Enterprise laid out the eligibility criteria regarding passenger vehicles, two and three-wheeler vehicles, and electric buses to avail the FAME II incentives. The recent investment of $1,460 million (INR 10,000 crore) offers a stable ground for the promotion of green mobility in India and is expected to support over 1,500,000 electric vehicles in the next three years.

As per the scheme, through an investment of $517.5 million (INR 3,545 crore), the Indian government would incentivize 7,090 electric buses. Because of all these factors, the Indian electric bus market is projected to reach 7,187 units by 2025, advancing at a 53.0% CAGR during the forecast period (2019–2025). Hybrid electric bus (HEB) and battery electric bus (BEB) are the two types of electric buses that are functional in the country. Between these two, the demand for BEBs is predicted to be higher in the years to come.

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This is due to the reducing prices of these buses and technological advancements. These buses have evolved in the past few years in terms of electric batteries with assistance from private and government programs. Moreover, the air quality problems in several urban areas are driving the demand for these buses. Electric buses are either 10 m in length, between which, the sales of buses less than 10 meters were sold more in 2018. Length-related subsidy resulted in the preference for smaller buses by the state road transport undertakings in the country.

Lithium–nickel–manganese–cobalt oxide (NMC) and lithium–iron phosphate (LFP) are the two major battery types that are utilized in electric buses. The declining prices of both these types of lithium-ion (Li-ion) batteries are allowing the Indian electric bus market to prosper. As per industry experts, the average cost of Li-ion battery cells for large orders reduced from about $1,000/kWh in 2010 to approximately $33/kWh in 2018. Battery accounts for approximately 40% of the total electric bus manufacturing cost; thus, the reduction in battery prices would aid in keeping the cost of electric buses in check.

In conclusion, the demand for electric buses in India​ is growing because of the declining air quality.