New Delhi, May 14 : The electric bus penetration in India is expected to rise from around 7 per cent currently to 35â??40 per cent of annual bus sales by FY35, with public transport EV penetration projected to exceed 85 per cent over the same period, a new report showed on Thursday.

Indiaâ??s bus market, historically stable at 35,000â??50,000 units annually, is entering a new phase of transition as electrification, government procurement programmes, and infrastructure investments, reshape the sectorâ??s growth trajectory.

With buses accounting for nearly 57 per cent of passenger-kilometres travelled in India, electrification of the segment is expected to play a key role in the countryâ??s clean mobility and decarbonization ambitions, according to the KPMG in India report.

â??Indiaâ??s electric bus transition is moving beyond a policy-led initiative to becoming a structural transformation opportunity for the broader mobility ecosystem. Public transport electrification has already created strong momentum, supported by government procurement programmes, improving cost economics, and increasing infrastructure investments,â?? said Rohan Rao, Partner, Automotive and Lead, Electric Mobility, KPMG India.

Going forward, the focus will increasingly shift towards building a scalable ecosystem that combines domestic manufacturing, financing innovation, charging infrastructure expansion, and operational efficiency to support sustainable long-term growth across both public and private transport segments, he mentioned.

Amid rising urbanisation, increasing mobility demand, sustainability commitments, and government-led clean mobility initiatives, the report indicates that Indiaâ??s bus industry is entering a significant phase of structural transformation.

This is supported by accelerating electric vehicle (EV) adoption, infrastructure development, and evolving operating models across public and private transport networks.

Indiaâ??s e-bus ecosystem is entering a critical phase where scale, localization, and execution capabilities will become key differentiators. While public transport undertakings continue to lead adoption, the next phase of growth is expected to emerge from private intercity mobility, airport transport, platform-based mobility solutions, and corporate fleets, explained Raghavan Viswanathan, Partner, Deal Advisory, KPMG in India.

According to the report, electric buses can deliver up to 70 per cent higher energy efficiency and significantly lower lifetime emissions compared to diesel buses. PM-eBus Sewa tenders for around 6,600 buses could potentially save 1-2 million tonnes of carbon dioxide and $2â??3 billion in oil imports over the concession period.

Nearly 62,000 e-bus tenders have been issued in India, with approximately 46,000 buses awarded under various government schemes. Around 16,300 electric buses were operational on Indian roads as of March 2026, reflecting both strong momentum and continuing deployment challenges, said the report.

More than 90 per cent of Indiaâ??s current e-bus deployments have been driven by government-led tenders and public transport undertakings. India is expected to tender nearly 40,000 additional electric buses by FY30 through central and state-led initiatives, it added.

/IANS