Volvo Buses has been in India since 2001. Ever since, it has been driving change in the industry by introducing disruptive products and solutions. Avishek Banerjee and Siddharth Shankar from BW Businessworld get Akash Passey, Senior Vice President, Region International, Volvo Bus Corporation to assess the Indian public transport scenario and the road ahead for a sustainable scale up.
Can you please provide us with an overview of the Indian public transport scenario with specific reference to the bus industry?
A report by KPMG states that in India, approximately 88 million trips (70 million by buses, 18 million by railways and 0.2 million by air) are made on public transport (PT) on a daily basis which translates to just 6-9 per cent of total trips being catered to by PT as against 30-35 per cent in most countries across the world.
This reality is amply borne by the fact that buses account for less than 1 per cent of the population of around 200 mn registered passenger vehicles. To put it in perspective, China has about six buses for 1,000 people but India has just four buses for 10,000 people.
Through the course of my 25-year stint with the bus industry, I have had the opportunity to study public transport in 100-150 countries. Every market is a different set of influencing factors such as demographics, geography and regulatory framework. India may not have the most optimally developed public transport system, but it certainly does not have the worst. For starters, we have a population of 1.3 billion people. So the importance of sustainable mobility cannot be underestimated.
Without quality public transport, passengers have traditionally been forced to make a choice between rattling front-engined non-AC buses and personal vehicles. It is here that a low-entry AC Volvo Bus can bridge the gap by providing a mobility solution that ensures the same comfort and safety as personal vehicles while also reducing pollution and congestion. Policymakers understand this paradigm well. We are seeing the promulgation of legislation that mandates superior comfort, safety and reliability norms of public transport in such a way that the artificial distinction between ‘standard’ and ‘premium’ buses is considerably reduced.
We see that some good changes have begun to be seen in the domain of public transport. How do we ensure that these positive developments gain traction in a sustainable manner?
In recent years, we have seen various stakeholders come together purposefully under public-private partnerships (PPPs), FAME and Smart City schemes. These are good developments. Now, in order to optimize synergies and create seamless multi-modality for passengers, we need a unified body to manage all modes of the public transport system. The idea is that if somebody is deboarding a flight, she can get into a bus, metro or shared cab through the same smart card.
Apart from proposing welcome changes in the domains of driver licensing, vehicle registration, vehicle safety and infrastructure creation, insurance and taxes, the draft Motor Vehicle Bill also attempts to regulate cab aggregators. As per recommendations, these aggregators would have to operate as a transport company along with their current registration as an Information Technology (IT) company. Such a measure is likely to enable greater coordination between aggregators and other shared modes of transport.
Isn’t finance a critical challenge in the quest to drive public transport in the right direction? How do we address this issue?
Given the challenge for cities to raise finances, the Government of India has identified the need to create an 'Urban Transport Fund' (UTF) to take up sustainable transport initiatives in cites. A separate Public Transport Fund (PTF), either within the UTF or as an exclusive fund, managed by the Unified Metropolitan Transit Authority (UMTA) is recommended to cover revenue gaps stemming from social obligations.
The PTF may be funded either through Government grants and external funding agencies or through local measures like parking fees, public transport cess on property tax and other innovative financing mechanisms.
It is highly encouraging that four Indian municipalities have raised Rs 26 billion through capital markets. City authorities and state transport undertakings are also moving to deploy underutilized public assets as land and bus stops for commercial developments such as ‘busports.’ Data-based infotainment and advertisement also offer other opportunities for revenue generation.
The Smart Cities program is rightly putting the focus on transport as an integral part of a greenfield/brownfield city’s masterplan. The accent is now on turnkey development. For instance, rather than bid out routes, there is now a thought process to bid out area development to a consortium of private investors. This may include the development of public transport infrastructure, roads, utilities as well as retail, residential and office spaces. In many cases, such a holistic approach may further evolve into government to government contracts that bring in foreign knowhow apart from lower cost capital that is available for longer tenure.
Is e-mobility more hype than reality? How does Volvo Buses view market prospects in the near to medium term in India?
It is clear that electric vehicles are here to stay. Volvo Buses has been at the forefront of delivering e-mobility solutions. Having commercialised hybrid buses more than a decade ago, Volvo Buses has now delivered more than 4,000 electrified buses globally. We were the first manufacturer to have commercialised hybrid buses in India. More than 30 months since deployment, these buses continue to deliver emissions and fuel economy benefits without additional investments in infrastructure. Going forward, we stand ready to play our part in India’s e-mobility journey with appropriate products and solutions that are tailored to evolving market needs.
We welcome progressive policies such as FAME initiated by the central government as well as the proactive announcement of EV policies by states. But as essential as subsidies might be to kickstart e-mobility, they cannot be a permanent consideration. There are no quick fixes.’
Any capital intensive venture has to grapple with the chicken and egg story. Will assured demand result in the lowering of costs OR is it the other way round? To solve this puzzle, we must adopt the AND approach. Economies of scale can be realised if demand and supply can be simultaneously triggered. Across important cities, we need green zones that mandate assured procurement and deployment of electrified buses. Supporting infrastructure in the shape of dedicated corridors, unhindered access to electricity and charging infrastructure is called for. This green public transport ecosystem must receive priority funding.
Against the backdrop of this sustainable framework, manufacturers, battery makers, charging system providers can embark on a proactive programme of localisation. Buses, battery management, set up and access to charging stations as well as finance may be offered as a bundled offering to customers – enabling a holistic view of lifecycle cost of operation.