Delhi EV Policy: Hard mandates could backfire, boost ICE vehicle offtake of neighbouring states

Highlights

• Delhi’s draft EV policy proposes strict timelines to phase out ICE vehicles in two- and three-wheelers, but implementation challenges and likely dilution remain.
• Lack of aligned mandates across NCR states could undermine the policy, as buyers may shift to Haryana or Uttar Pradesh for ICE vehicle purchases.
• While mandates target key segments, passenger cars are exempt, with the policy instead focusing on subsidies, tax breaks, and hybrid incentives.

There is no mandate yet in either state against registering new ICE vehicles, thereby defeating the very purpose of a mandate-driven electrification policy.

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Delhi has proposed stringent mandates for two-wheelers and commercial three-wheelers, as well as other vehicle categories, in its quest for rapid electrification. But while the intent is good, implementation of a mandate-driven Delhi Electric Vehicle (EV) policy 2026 may not be easy. Many industry experts believe there could be dilution of the strict mandates in the final document.In any case, nothing stops Delhiites from circumventing the mandates, going to vehicle dealerships in neighbouring Haryana or Uttar Pradesh to buy ICE vehicles. There is no mandate yet in either state against registering new ICE vehicles, thereby defeating the very purpose of a mandate-driven electrification policy. Unless the entire NCR adopts the mandate-driven policy outline, the mandates may see limited success.Also, if the ongoing debate within the Commission of Air Quality Management (CAQM), a statutory body set up to manage air pollution in the National Capital Region (NCR) and adjoining areas, are any indication, dilution and amendments to some of the harsh mandates – including making an increasing percentage of sales of vehicle OEMs electric – being discussed in within the commission may be imminent as OEMs push back.The Delhi EV policy has proposed no mandates for the electrification of passenger vehicles but has outlined purchase subsidies for different vehicle categories with a sunset clause.Then, mandates can only work through effective implementation. An industry veteran pointed out that the electrification of vehicle fleets through mandates has global precedent, in parts of China, the US, and some parts of Europe. “In these countries, mandates have worked, but in India, enforcement remains a problem.Take the example of the two-helmet mandate for two-wheeler OEMs, which has not yet been notified, though discussions have concluded. Then, the proposal to implement the Anti Lock Braking System (ABS) on all two-wheelers, not just 125 cc and above, and on electric vehicles is also pending since industry has been opposing it….mandates can work only when implementation is strictly done,” this person said.What the draft policy says

The Delhi EV policy draft unveiled on Saturday proposes a mandate for electric-only vehicle registrations, effectively phasing out internal combustion engine (ICE) vehicles in high-volume segments:

• Electric Three-Wheelers (L5): From 01 January 2027, only electric versions will be permitted for new registration in Delhi.
• Electric Two-Wheelers: From 01 April 2028, only electric versions will be permitted for new registration.
• No conventional ICE vehicles (diesel or petrol) can be inducted into existing fleets of 4-wheeler LCVs, LGVs (up to 3.5 tons), and 2-wheelers starting 01 January 2026 (with a limited exception for BS-VI 2-wheelers until the end of 2026).
• All hired or leased vehicles for the government must be only electric from the date the policy is notified. Furthermore, all new intra-state buses and N1 trucks purchased or leased by government bodies must be electric.
• The school bus fleet (owned or hired) must reach 30 per cent electrification by 31 March 2030, with specific interim targets

The policy also proposes tapering purchase incentives to encourage early adoption:-

• Purchase Subsidies: Two-wheelers receive up to ₹30,000 in year one, while electric auto-rickshaws and N1 goods vehicles receive ₹50,000 and ₹100,000, respectively, in the first year.
• Scrapping Incentives: Additional incentives are available for scrapping old Delhi-registered BS-IV and below vehicles, including ₹10,000 for two-wheelers and ₹100,000 for cars (limited to the first one lakh applicants).
• Tax Exemptions: Most EVs are granted a 100 per cent exemption from road tax and registration fees until March 2030, though cars priced above ₹30 lakh are excluded from this benefit.

Unlike Chandigarh, Delhi has mandated a single date-based cliff rather than a gradual reduction with no conditionality around charging infrastructure readinessPawan Mulukutla

Chandigarh only precedent

Terming the draft Delhi EV Policy 2026 “structurally ambitious”, Pawan Mulukutla of Executive Program Director – Integrated Transport, Clean Air and Hydrogen at WRI India said, “The only domestic precedent for this kind of hard registration prohibition is Chandigarh, which operationalised a graduated ICE two wheeler cap from 2022 — reducing permissible registrations by 35 per cent and subsequently 70 per cent, leading to zero by 2024-25.””Chandigarh survived a High Court challenge and enforced the cap through Vahan portal cutoffs. Delhi’s approach is structurally similar, but the scale is incomparably larger. Unlike Chandigarh, Delhi has mandated a single date-based cliff rather than a gradual reduction with no conditionality around charging infrastructure readiness,” he added.

Take the case of Maharashtra, where its 2025 EV policy took a target-based, rather than mandate-based approach. Targets were 40 per cent e-2W and e-3W penetration by 2030 and 50 per cent fleet electrification for aggregators, with no registration prohibition.

Mulukutla said Andhra Pradesh’s Sustainable Electric Mobility Policy 4.0 mandates 100 per cent APSRTC fleet electrification, the most ambitious public bus mandate in any current Indian state policy, but sets volumetric registration targets rather than prohibition for private vehicle segments.

Tamil Nadu similarly anchors its bus mandate at 30 per cent of the fleet by 2030. No other major state has attempted disallowing a segment-wide ICE registration.

“What is notable across all these frameworks, however, is that the mandates remain firmly on the demand side — regulating who can register, which fleets must transition, and by when. None of the current state policies pair these registration requirements with meaningful supply-side obligations aimed at OEMs,” Mulukutla said.

Strong hybrids serve as a natural transition technology, delivering immediate benefits in terms of improved fuel efficiency and reduced emissionsPuneet Gupta

No mandates for passenger cars

Industry executives said the passenger car industry has heaved a sigh of relief at the absence of mandates and proposed scrappage incentives. Also, there is a proposal for a 50 per cent concession in road tax and registration fees for strong hybrid vehicles, which Puneet Gupta, Director at S&P Global, termed as “pragmatic”.

“Providing incentives for strong hybrid vehicles is a pragmatic and forward-looking policy aimed at accelerating the shift away from conventional ICE vehicles. Strong hybrids serve as a natural transition technology, delivering immediate benefits in terms of improved fuel efficiency and reduced emissions. In the context of Delhi, one of the most polluted and densely populated cities globally, this is not just an option, but an urgent need to promote cleaner mobility solutions,” Gupta said.

“This initiative by the Delhi government is a commendable step in the right direction, and it is likely to set a precedent for around at least 30 highly polluted urban cities across India,” he added.