Staff Writer
New Delhi: The Indian bus sector is experiencing unprecedented growth, emerging as a key driver in the country’s transportation industry. A recent report by credit rating agency ICRA highlights the sector’s impressive recovery post-pandemic, with substantial growth recorded over the past few financial years.
According to ICRA, the bus segment saw an extraordinary growth rate of 160% in FY2023, making it the fastest-growing mobility sector in the country. The sharp resurgence was fueled by multiple factors, including the revival of public transport demand post-pandemic, large-scale procurement of buses by state transport undertakings (STUs), and fleet modernization initiatives by private transport operators.
During the pandemic, public transportation systems were severely impacted due to lockdowns, reduced commuter movement, and financial stress on government-run transport agencies. However, as mobility restrictions eased, public confidence in shared transportation returned, leading to a surge in demand for bus services across intercity and intracity routes.
State governments also played a critical role in supporting the recovery. Several STUs undertook large-scale procurement drives to replace aging fleets and expand their services, thereby contributing to the sector’s rapid growth. Meanwhile, private transport operators also resumed and expanded their operations, driven by the increased movement of people for work, education, and leisure travel.
Continued Expansion in FY2024
The positive momentum continued into FY2024, though at a more moderate pace, with the sector growing 27% in volume. The demand for buses remained strong due to increased travel between cities, rising tourism activity, and the expansion of urban mobility initiatives.
Government policies aimed at promoting sustainable and efficient public transport further boosted the sector’s performance. The introduction of electric buses, smart city transport initiatives, and improved urban planning measures contributed to increased bus adoption across various states.
Additionally, the corporate sector’s growing interest in employee transportation solutions added to the demand for buses, with many companies investing in fleet services for staff commuting.
Sustained Growth in FY2025
In the first nine months of FY2025, the bus segment continued its growth trajectory, recording a 16% increase despite some short-term fluctuations in procurement cycles.
One of the primary reasons for the sector’s resilience is the rising investment in electric and clean-energy buses. With a growing emphasis on reducing carbon emissions and enhancing urban air quality, state and central governments have been actively pushing for electric mobility solutions through subsidies and incentives.
The expansion of organized public transport systems in metropolitan and tier-2 cities has also played a crucial role in sustaining the sector’s momentum. As urban centers expand and traffic congestion worsens, the demand for reliable and efficient bus services has increased, driving further investment in the sector.
Industry analysts estimate that bus volume growth for the entire financial year will range between 11% and 14%. A significant factor behind this projected growth is the aggressive fleet expansion plans announced by several state governments, including the procurement of electric buses under sustainability-driven mobility projects.
Outlook for FY2026: Steady but Moderated Growth
Looking ahead to FY2026, the bus sector is expected to maintain its growth trajectory, albeit at a slightly slower pace. Analysts predict a growth rate of 8% to 10%, supported by continued investments in public transport infrastructure, fleet renewal programs, and the expansion of both intercity and intracity bus networks.
A major focus area for the industry will be green mobility solutions, with a growing shift towards electric and hybrid buses. Governments and transport operators are increasingly adopting cleaner energy alternatives to meet environmental regulations and sustainability goals.
Additionally, smart city initiatives and urban development programs will further drive the demand for technologically advanced public transport systems. The integration of intelligent transport systems (ITS), digital ticketing solutions, and passenger-friendly amenities is expected to enhance service quality and increase ridership.
Despite a strong recovery, the bus sector faces several challenges that could impact its future growth. One significant issue is the rising cost of raw materials, including steel and automotive components, which puts pressure on both manufacturers and operators. Additionally, regulatory hurdles, such as stringent emission norms and transport policies, may slow down fleet expansion efforts. Another major challenge lies in supply chain constraints, particularly in the procurement of electric buses. Delays in battery supply and manufacturing bottlenecks often disrupt production and delivery timelines, creating further obstacles for the industry’s growth.
However, opportunities in the sector far outweigh these challenges. With rapid urbanization, government-backed public transport initiatives, and growing private sector participation, the bus industry is well-positioned for long-term expansion.
Several government initiatives, including dedicated bus corridors, smart mobility solutions, and sustainable transport policies, are expected to improve service efficiency and attract more commuters. As the sector evolves, buses will play a pivotal role in shaping India’s urban mobility landscape, promoting sustainable and interconnected transportation networks.
With strong policy support and increasing investment in modern transport solutions, the Indian bus sector is on the path to transforming urban mobility, ensuring a more efficient, eco-friendly, and passenger-centric future.