Leading truck and bus maker Ashok Leyland has proposed to invest ₹1,000 crore over the next few years in a greenfield integrated bus manufacturing unit, which will focus on green mobility, in Uttar Pradesh.

The Hinduja flagship was scouting for a location to set up a new electric bus manufacturing unit. Mahesh Babu, CEO, Switch Mobility, Ashok Leyland’s EV arm, had told businessline a year ago that it was hoping to finalise a location in southern India.

However, the company has now chosen Uttar Pradesh as its new home to make its electric buses and signed a memorandum of understanding with the Government of Uttar Pradesh on Friday. This will be the seventh factory of Ashok Leyland in the country.

Net zero mission

Uttar Pradesh, Chief Minister Yogi Adityanath said in a statement that Ashok Leyland’s investment in Uttar Pradesh reinforces the State’s rapidly growing position as a manufacturing hub. “The Government of Uttar Pradesh is eager to attract private-sector investments aligned with our net zero mission,” he added.

Ashok Leyland’s proposed manufacturing facility in Uttar Pradesh will initially have the capacity to produce 2,500 buses per year. The company intends to gradually expand this capacity to accommodate up to 5,000 vehicles per year over the next decade as the demand for electric and other types of buses is expected to grow substantially over the next few years.

While the new factory will predominantly focus on the production of electric buses, it may also carry the flexibility to assemble other vehicles powered by currently available fuels as well as emerging alternative fuels.

“Ashok Leyland’s mission to achieve net zero by the year 2048 is one of the triggers to set up this plant in Uttar Pradesh. Uttar Pradesh is not only one of the largest and the most dynamic States in our country but also very firm in its commitment towards environment and sustainability,” Shenu Agarwal, MD and CEO, Ashok Leyland said.

E-bus spree

The Indian e-bus market has reported rapid growth in the past two years, supported by a host of favourable factors including the government’s push to electrify fleets and the efforts of OEM players to develop integrated EV ecosystems.

The Central government’s recent announcement for the deployment of 10,000 electric buses across 169 cities is expected to drive e-bus volumes in the coming months, while the National e-Bus Programme (NEBP), which aims to deploy 50,000 electric buses across India, and the FAME-III policy framework expected in FY24, are expected to spur the e-bus sales further.

In the next 5-7 years, the electric bus market is expected to witness high levels of penetration in the country. “The e-bus penetration is expected to increase to 11-13 per cent in FY2025, up from 7 per cent in FY23. By FY30, it is projected to reach 40 per cent,” according to rating agency ICRA .