It is a well-known fact that buses are the most integral component of mass mobility in India across all states. Moreover, the country’s bus market has significantly been facilitating the growth and development of the domestic automotive industry, with its production and supply chain processes supporting numerous stakeholders of the domain along with providing employment to a major part of the blue-collar segment.
Recent initiatives like that of Niti Aayog to provide a Model Concessionaire Agreement (MCA) document for the introduction of electric bus fleet in cities on Public-Private Partnership (PPP) mode on operational expenditure model has been seen as a major development in the Indian bus industry, enabling manufacturers as service providers.
Driven by such government initiatives, along with general factors like rapid urbanisation, affordable housing projects, infrastructural development and low penetration of public transportation, the Indian bus market is seeing a positive momentum this fiscal year, albeit with a few challenges.
Accounting for approximately 16% of the world’s production, India stands strong as the second largest producer of buses across the globe. However, the Indian bus market showed de-growth of the segment in the fiscal year 2017-18. This was largely because of factors like price hike due to GST, and lower demand from State Transport Undertakings (STUs) which account for a little over one-third of the bus sales in the country.
However, the market is witnessing a gradual recovery now in demand from STUs, private bodies, staff carrier segments, and online aggregators after a year of decline in growth. Moreover, with a phenomenal rise in e-commerce, online travel agencies (OTAs) have been adding bus services in their offerings as well, further supplementing the growth of the industry.
For an industry that provides the prime-most mode of mass transportation in the country, the bus market’s poor rate of penetration poses another major challenge. Constrained by the fact that the market provides a count of just 1.5 buses per thousand people, the prospective demand to combat the same, especially in the local market, remains pretty high.
Since India still has a long way to go to evolve in terms of alternative modes of mass mobility, the need to continually treat buses as the lifeline of public transportation has been further driving key developments in the Indian bus market.
A recent shift has been observed in the Indian bus market preferences, with OEMs and suppliers advancing towards modern technological tools and electronics to present better-built and value-added bus products pertaining to specific intra-city and inter-city requirements.
For instance, the industry has begun focusing on its ERP needs such as provision of smart payment options to cater to a tech-savvy generation of commuters. Buses are also equipped with the latest technologies for real-time data of transactions as well as location tracking, thereby finding a better appeal among digital-oriented masses.
With ever-rising environmental concerns, the need for maintaining the amount of greenhouse gases emitted by conventional modes of transportation has been severely felt all across the country.
To combat such challenges, the government has been taking initiatives to encourage the use of electric-powered vehicles across the states. Because of this, there has been a recent boost in the demand for electric buses, with the electric bus market projected to grow at a phenomenal CAGR of approximately 124%, surpassing an amount of over $667 million by 2023.
Moreover, the Ministry of Urban Development has proposed a Rs 250 billion grant for development of EVs for public transportation. Therefore, the subsidies provided by the government along with foraying of leading commercial vehicle manufacturers in this segment is bound to lead to better affordability and consequent expansion of the electric bus market in the future.
The fact that India certainly needs more buses for the public transport system to reach its optimum potential has unlocked greater possibilities for this segment. Further, it has been predicted that within the next five years, the number of buses being sold will be more than double the current figure to facilitate efficient transportation.
Driven by key innovations and government initiatives, especially in the electric bus segment, the growth outlook of the Indian bus market is likely to remain highly favourable in the years to come.
(The writer is VP, Product and Digital Marketing – Travelyaari)