Unlocking India's Mobility Potential: Tier-2 & Tier-3 Cities at the Forefront, ET TravelWorld
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Driving India's energy independence: The economic imperative of electrifying intercity bus travel
While the initial investment for an electric bus is around ₹2.5 crore, 44% of this cost is typically offset over time by savings on fuel and maintenance, which make up a significant portion of the operating expenses in ICE buses and freight vehicles. The long-term savings are substantial. Operators can expect annual operational cost reductions of ₹15–20 lakhs per bus, primarily due to no fuel and lower maintenance expenses. See More Details
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India's growth is expanding well beyond the metros. Tier-2 and Tier-3 cities are experiencing rapid urbanisation, with increasing populations and rising economic activity. Over the past decade, the number of cities with populations over a million has steadily grown, reflecting a clear shift in where India's growth is happening. States like Telangana and Andhra Pradesh continue to see strong urban population growth. Overall, India's urban population share is expected to keep rising, driven largely by smaller cities expanding both in size and economic importance.Along with this growth, disposable incomes are rising in these cities. The number of households with annual incomes between ₹10 lakh and ₹25 lakh has expanded significantly and continues to grow. This increase in affluence is raising expectations for quality products and services, including safe, affordable, and reliable intercity travel.Despite their growth, many Tier-2 and Tier-3 cities still face limited connectivity options. Air travel remains a small fraction of intercity trips, with most travel depending on buses, cars, and trains. Rail services are often overcrowded and cannot fully meet demand, while air connectivity in many smaller cities remains sparse.The government's regional connectivity initiatives , like the UDAN scheme, aim to improve air links by supporting smaller airports and adding new routes. However, these efforts take time, and for the foreseeable future, road-based transport will remain the backbone of intercity travel for these regions.This gap presents a significant opportunity for modern bus operators to provide scalable, efficient, and comfortable mobility solutions.Digital penetration in Tier-2 and Tier-3 cities has grown rapidly. With over 690 million active internet users nationwide, a large and growing share comes from smaller cities. Mobile-first behaviour, online ticket booking, and digital payment platforms have become common, enabling technology-driven bus services to reach customers easily.Moreover, the gig economy is gaining momentum in these cities, with employment growth rates often outpacing metros. This digital engagement supports both the demand for better mobility and the supply of flexible workforce options for transport providers.Migration patterns show many workers moving from small towns to growing industrial and service hubs, particularly in southern states. These flows increase the need for reliable and frequent intercity travel options connecting smaller cities and towns. Changing social dynamics, including rising female labour participation, add another layer of demand for safe and convenient transport.Government programs are strengthening infrastructure in Tier-2 and Tier-3 cities. The Smart Cities Mission and Bharatmala project focus on improving roads, urban transport, and connectivity. Recent budgets have prioritised regional connectivity with incentives for airlines and investments targeting smaller towns and aspirational districts. These developments help create smoother, more efficient corridors for intercity buses and other forms of transport.Consumers in smaller cities are seeking more than just basic travel options. Demand is rising for air-conditioned, safe, and technology-enabled bus services. As incomes grow, premium and reliable travel options that combine comfort with affordability are becoming increasingly important. This shift is opening the door for new business models and service improvements in intercity bus transport.From a business perspective, Tier-2 and Tier-3 city routes offer sustainable growth. Operating costs tend to be lower than in metro corridors, while consistent demand supports high vehicle utilisation. This combination makes expansion viable and profitable for mobility providers.The future of India's mobility ecosystem depends on integrating different modes of transport across the country. Smaller cities will be central to connecting last-mile travel with long-distance routes. With rising digital literacy, supportive policies, and growing aspirations, Tier-2 and Tier-3 cities are well-positioned to lead this transformation.This is the Bharat opportunity . The next phase of India's mobility story will be written in these cities. For businesses and policymakers, it's time to recognise their unique needs and invest in the solutions that will connect millions of travellers every day.Because intercity travel in India's future will be shaped far beyond the metros, in the vibrant, fast-growing towns and cities across Bharat.The author is the CEO of YoloBus.The views expressed are solely of the author and ETTravelWorld.com does not necessarily subscribe to it. ETTravelWorld.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.
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Unlocking India's Mobility Potential: Tier-2 & Tier-3 Cities at the Forefront, ET TravelWorld
Advt Advt Driving India's energy independence: The economic imperative of electrifying intercity bus travel While the initial investment for an electric bus is around ₹2.5 crore, 44% of this cost is typically offset over time by savings on fuel and maintenance, which make up a significant portion of the operating expenses in ICE buses and freight vehicles. The long-term savings are substantial. Operators can expect annual operational cost reductions of ₹15–20 lakhs per bus, primarily due to no fuel and lower maintenance expenses. See More Details By , ETTravelWorld Join the community of 2M+ industry professionals. Subscribe to Newsletter to get latest insights & analysis in your inbox. All about ETTravelWorld industry right on your smartphone! Download the ETTravelWorld App and get the Realtime updates and Save your favourite articles. India's growth is expanding well beyond the metros. Tier-2 and Tier-3 cities are experiencing rapid urbanisation, with increasing populations and rising economic activity. Over the past decade, the number of cities with populations over a million has steadily grown, reflecting a clear shift in where India's growth is happening. States like Telangana and Andhra Pradesh continue to see strong urban population growth. Overall, India's urban population share is expected to keep rising, driven largely by smaller cities expanding both in size and economic with this growth, disposable incomes are rising in these cities. The number of households with annual incomes between ₹10 lakh and ₹25 lakh has expanded significantly and continues to grow. This increase in affluence is raising expectations for quality products and services, including safe, affordable, and reliable intercity their growth, many Tier-2 and Tier-3 cities still face limited connectivity options. Air travel remains a small fraction of intercity trips, with most travel depending on buses, cars, and trains. Rail services are often overcrowded and cannot fully meet demand, while air connectivity in many smaller cities remains government's regional connectivity initiatives , like the UDAN scheme, aim to improve air links by supporting smaller airports and adding new routes. However, these efforts take time, and for the foreseeable future, road-based transport will remain the backbone of intercity travel for these gap presents a significant opportunity for modern bus operators to provide scalable, efficient, and comfortable mobility penetration in Tier-2 and Tier-3 cities has grown rapidly. With over 690 million active internet users nationwide, a large and growing share comes from smaller cities. Mobile-first behaviour, online ticket booking, and digital payment platforms have become common, enabling technology-driven bus services to reach customers the gig economy is gaining momentum in these cities, with employment growth rates often outpacing metros. This digital engagement supports both the demand for better mobility and the supply of flexible workforce options for transport patterns show many workers moving from small towns to growing industrial and service hubs, particularly in southern states. These flows increase the need for reliable and frequent intercity travel options connecting smaller cities and towns. Changing social dynamics, including rising female labour participation, add another layer of demand for safe and convenient programs are strengthening infrastructure in Tier-2 and Tier-3 cities. The Smart Cities Mission and Bharatmala project focus on improving roads, urban transport, and connectivity. 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This combination makes expansion viable and profitable for mobility future of India's mobility ecosystem depends on integrating different modes of transport across the country. Smaller cities will be central to connecting last-mile travel with long-distance routes. With rising digital literacy, supportive policies, and growing aspirations, Tier-2 and Tier-3 cities are well-positioned to lead this is the Bharat opportunity . The next phase of India's mobility story will be written in these cities. For businesses and policymakers, it's time to recognise their unique needs and invest in the solutions that will connect millions of travellers every intercity travel in India's future will be shaped far beyond the metros, in the vibrant, fast-growing towns and cities across author is the CEO of views expressed are solely of the author and does not necessarily subscribe to it. shall not be responsible for any damage caused to any person/organisation directly or indirectly.
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