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Union Minister for Environment, Forest and Climate Change Bhupender Yadav and US Special Presidential Envoy for Climate, John Kerry on Saturday discussed the US-India collaboration to establish a payment security mechanism to address current constraints in the expansion of e-bus fleets in India.

With contributions of $240 million from the government of India and $150 million from the US government and their partners, the establishment of the PSM guarantees delayed payments from the fiscally constrained state bus companies. The PSM aims to unlock up to $10 billion in non-recourse lending to e-bus manufacturers in India to deploy 38,000 buses.

Secretary John Kerry, US Special Presidential Envoy for Climate, speaking on the occasion, said, "with PSM, we are taking a major footstep towards helping India electrify its bus fleet".

The move was taking an Indian solution to maximize India's opportunity to decarbonise its transportation sector.

Yadav said decarbonisation of the transport sector is essential to reduce the Greenhouse Gas (GHG) emissions and to meet the ambitious target of achieving net-zero emissions by 2070 set by government of India.

To achieve the goal of net zero emissions, the adoption of electric vehicles (EVs) plays a crucial role and given that buses serve the mass public, prioritising electric buses is essential as a significant mode for decarbonising the transport sector, the minister added.

Yadav stated that this transitioning to e-buses, however, pose challenges to Public Transport Authorities (PTAs) owing to their high upfront costs and lower realization of 'revenue from operations.

The India-US Payment Security Mechanism (PSM) for e-buses will serve as an incentive for both Indian and international OEMs/Bus operators to participate in e-bus operations and potentially establish a manufacturing hub in India, contributing to the growth of e-bus industry and e-bus exports, he added.

The India-US Government Joint Statement to develop a "Payment Security Mechanism (PSM)" was released during the visit of Prime Minister Narendra Modi to the US.

It aims to facilitate the deployment of 10,000 made-in-India electric buses.

India's existing bus fleet stands at 1.5 million, most of which run on diesel.

After a few successful pilots in response to a federal subsidy programme, India rolled out a large, unified tender of 5,450 e-buses worth over $1 billion and spread across five states. Discovered prices were significantly lower than diesel. Encouraged by the success, the government established a target of 50,000 e-buses.

A total of 12,000 e-buses in different stages of contracting are now coming onto Indian roads.