The Foundation for Economic Growth and Welfare (EGROW Foundation), a non-profit public policy organisation, in collaboration with Primus Partners, a leading home-grown consultancy firm, has released a comprehensive study titled 'Retrofitting of Inter-City Diesel Passenger Buses: An Economic Analysis and Policy Prescriptions.'
The study highlights that a standard retrofit on a 9-meter bus reduces the cost per kilometre by approximately 34.48% compared to an internal combustion engine (ICE) bus. Retrofitting 20,000 buses annually in India could save about 500,000 tonne of diesel and reduce crude oil imports by 12.7 million barrels per year. Additionally, the industry could significantly contribute to India’s goal of creating 30-35 million new green jobs by 2047.
The global e-mobility market has experienced significant growth, increasing from two million vehicles in 2016 to 7.2 million in 2019, a 30% rise in just three years. The report, based on data gathered from industry pilots of bus operations between Mumbai and Pune, compares ICE buses and electric vehicles (EVs) to evaluate the costs and benefits of EV retrofitting and emphasizes the need for a scaled pilot implementation of EV retrofitting.
Economic, Environmental Benefits
Dr Charan Singh, CEO of EGROW Foundation and Davinder Sandhu, Chairperson of Primus Partners, stated in their foreword: “The economic benefits of retrofitting extend beyond financial savings to broader economic revitalisation and environmental improvements. Retrofitting offers a pragmatic solution by 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 report notes that the number of buses in India is expected to reach three million by 2030, necessitating a shift to greener technologies, especially in pollution-intensive sectors like transport. A strategic approach involving policy reforms, financial support from the government, and technological advancements is essential to overcoming the barriers to retrofitting diesel buses.
Key Findings
Cost Efficiency: A 9-meter retrofitted bus costs INR 19 per km, while a 12-meter bus with two batteries costs INR 22 per km, and a 12-meter bus with three batteries costs INR 23 per km. This makes retrofitted 9-meter buses 32.1% more cost-effective than new EV buses.
Return on Investment: For a 9-meter retrofitted bus with an extended life of ten years, the cost per km drops to less than INR 15. For a 12-meter bus with two batteries, the cost is less than INR 17, and for three batteries, less than INR19.
Energy Source: More than 75% of domestic electricity comes from coal-based thermal power. Effective decarbonisation of the transport sector requires using renewable energy for retrofitted buses.
Job Creation: Retrofitting ICE buses to EVs will create new job opportunities. It is projected to add 6,000-7,000 direct jobs and 36,000-42,000 new indirect jobs over the next few years.
Policy Recommendations
Scaled Pilot Projects: Implement pilot projects to convert existing ICE buses to EVs across different regions.
Vehicle Scrapping Policy: Modify the vehicle scrapping policy to reduce re-registration fees for retrofitted EV buses, encouraging the reuse of older diesel vehicles.
Subsidies and Incentives: Provide subsidies for retrofitting old diesel buses in coordination with state governments and include retrofitting incentives in the FAME policy to boost EV adoption.
GST Rebates: Offer GST rebates for retrofitting vehicles and used components to raise awareness and support.
State-Level Policies: Introduce state-level Retrofit EV Policies to support retrofitting, including interest rate subsidies and charging infrastructure development.
Conclusion
The extensive report by EGROW and Primus Partners highlights the necessity of retrofitting diesel buses to electric amid changing environmental conditions. Retrofitting offers a cost-effective, environmentally friendly transition solution. Implementing the recommended policies and initiatives can accelerate EV adoption in public transport, supporting India’s broader goals of reducing emissions and enhancing energy security while fostering innovations in green technologies for a circular economy.
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