A fresh draft of Delhi’s electric vehicle (EV) policy, published on 11 April for public review, has reopened fault lines within India’s auto industry.
While the previous version collapsed last year over disagreements about hybrid incentives, the new draft shifts the focus toward electrification mandates — especially for two- and three-wheelers — setting the stage for a fresh pushback.
Here’s what has changed, why it matters, and what’s making carmakers wary.
The 2025 draft Delhi EV Policy proposed equal benefits for hybrid and electric vehicles (EVs), sparking a debate that lasted months and eventually led to the draft being scrapped.
The government had proposed waiving road tax and registration fees for all EVs priced under ₹20 lakh. The same waiver was extended to strong hybrid and plug-in hybrid vehicles. This triggered concern among automakers that had invested heavily in full EV platforms, as hybrids would receive similar fiscal benefits without being fully electric.
According to the new 2026 draft, the Delhi government has proposed a full waiver of road taxes and registration fees for EVs priced under ₹30 lakh, but only a 50% waiver for strong hybrids.
A strong hybrid is a vehicle that runs on both petrol and an electric motor, as opposed to pure electric vehicles, which only run on electric powertrains. Another type is plug-in hybrid, which runs majorly on an electric motor, but can also use petrol.
Electrification mandates for two-wheelers and three-wheelers have raised concerns among Indian automakers as most of these companies primarily manufacture petrol and diesel vehicles, while also making a few EVs and hybrids.
The new 2026 draft Delhi EV Policy has called for a ban on the registration of new two-wheelers starting 1 April 2028. It also says only electric three-wheelers in the L5 category will be registered starting 1 January 2027.
L5 electric three-wheelers are bigger than e-rickshaws, and are used for last mile commercial and passenger transit.
A report by KPMG in December noted that price parity between electric and ICE two-wheelers has almost been achieved in India, largely due to falling battery costs and subsidies. The gap between ICE and electric vehicles in other segments is wider, with electric buses and trucks costing even 2-2.5 times the price of their ICE counterparts.
The policy also includes electrification mandates for school buses, fleet operators, and even for government procurement and use. It calls for the electrification of 10% of school buses in the first two years of the policy, 20% in the first three years, and 30% by 31 March 2030.
It also says no petrol or diesel vehicles can be inducted in delivery fleets or cab services starting 1 January 2026, except BS-VI two-wheelers till the end of calendar year 2026.
Several analysts argued that mandates may be necessary to accelerate adoption, and have the potential to reduce vehicular emissions on Delhi’s roads, which lead to serious air pollution concerns, especially during winter months, when the air quality index frequently crosses 400 (severe category).
“Subsidies have played an important role in initiating the EV transition, but global evidence clearly shows that incentives alone are insufficient to drive large-scale adoption. A shift towards regulatory measures, including the gradual phase-out of internal combustion engine vehicles in cities, is essential,” said Amit Bhatt, India managing director, International Council on Clean Transportation (ICCT), a global think tank.
Analysts at ratings agency Crisil echoed these sentiments. “ in the two-wheeler segment is projected to increase to 21-23% by fiscal 2029, compared with 18-20% otherwise, while three-wheeler penetration could rise to 40-42% versus 38-40%,” said Crisil Intelligence in an impact note on the Delhi EV Policy this month.
Automakers have publicly backed the incentives, but expressed caution about the mandates. Speaking at a Society of Indian Automobile Manufacturers (Siam) event in New Delhi, Tata Motors CEO Shailesh Chandra, who also heads Siam, said the auto industry stood behind enablers such as fiscal incentives, which can lower the green premium paid on EVs compared to the price of petrol and diesel vehicles.
“Our position from Siam has been that enablers are the best way to promote electric vehicles, and not mandates, that is what it internally is. I think the government has definitely taken the route of enablers, but we will also have to see how the draft policy then ensures that it does not move too much of mandates,” Chanda told reporters on 14 April.
To be sure, the draft Delhi EV Policy, which will be in place until 2030, does create incentives for purchasing cleaner vehicles. It provides consumers a reduction on the price tag of electric two-wheelers, three-wheelers, small trucks, along with scrapping incentives for all vehicles.
Delhi recorded sales of about 41,000 in FY26, against 524,000 petrol and petrol/ethanol two-wheelers in the same period, according to Vahan data.
Similarly, about 9,000 electric three-wheelers (L5 category) were sold in Delhi in FY26, while about 19,000 units were sold in total in this period, Vahan data showed.
