Looking Into The Future: The Next Phase Of Digitally Empowering The Indian Traveler The bus industry in India is projected to achieve a value of INR 104,000 crores in 2026, with a compound annual growth rate (CAGR) of 6.64 per cent.

The bus industry in India is projected to achieve a value of INR 104,000 crores in 2026, with a compound annual growth rate (CAGR) of 6.64 per cent. The CAGR for State Transport Undertakings (STUs) is 6.36 per cent and it is 7.37 per cent for private buses. These numbers have come out after findings from a recent report.

The surface transportation services like bus and rail travel has huge potential for OTA service providers who offer value added services to their customers in addition to basic online ticketing. Here are some significant findings that the report revealed:

1. Karnataka, Maharashtra, Tamil Nadu, Andhra Pradesh, Telangana, and Uttar Pradesh emerge as the principal markets in STUs, constituting nearly 70% of the market share. The top five states in total addressable market (TAM) for private buses are Uttar Pradesh, Maharashtra, Rajasthan, Punjab, and Haryana, which are expected to account for around 45% share by 2026.

2. Online ticketing among bus travelers is on the rise, even though the price sensitive category of non-AC buses or intra-city bus ticketing is still predominantly offline based. Intra-city bus travel is still predominantly served by State Transport Units (STUs) which offers great scope for private sector involvement.

3. Intra-city bus services are witnessing a plethora of value-added services like live bus tracking and digital ticketing being offered in city buses. A primary survey conducted among bus travellers across eight cities revealed significant interest and uptake for online ticketing and value-added services.

4. Even though many users still are not using online ticketing simply as a continuation of old habits, there is a great interest for online services provided they offer certain features like details on seat availability and reservation, low costs, discounts and multiple options at specific price ranges.

5. As regards Indian railways, the revenue contribution of reserved passengers stands at 70%, which corresponds to only 12% passengers carried in terms of volume, whereas 88% unreserved passengers contributed to only 30% of the revenue to the Indian railways.

6. Online ticketing is Indian railways is still restricted for most private players, driven primarily by the online ticketing services run by Indian Railways itself. Nonetheless, the report estimates that reserved ticketing presents significant for OTAs/Agents in coming years.

7. With unreserved passengers constituting a substantial portion of the total passenger count, collaboration between CRIS and private OTAs emerges as a transformative opportunity. The shift to digital ticketing not only reduces operational burdens for the Indian Railways but also offers private OTAs an avenue to innovate tariff structures and enhance user convenience. This synergy holds the potential to elevate the passenger experience, alleviate infrastructure strain, and foster a symbiotic relationship, yielding efficiency gains for the railway system and expanded market opportunities for the private sector.

Source: Traveltech 2.0: The Next Phase of Digitally Empowering the Indian Traveler", a report jointly produced by the Internet and Mobile Association of India (IAMAI) and Grant Thornton Bharat