Delhi sets countdown for ICE 2W, 3W phaseout; new EV policy from July 1

Fresh registrations to stop over the next 2 years under new EV policy

The Delhi government on Monday announced that it will stop fresh registrations of internal combustion engine (ICE) two-wheelers (2Ws) and three-wheelers (3Ws) over the next two years, leaving major automobile (auto) makers scrambling amid fears that other states could follow suit and force them to redraw product launch plans and investment strategies.

 

The Delhi government Cabinet on Monday approved the Delhi EV Policy 2.0, which will come into effect from July 1.

 

Apart from the aforementioned ban, the policy also delivered a definitive verdict against extending tax concessions to strong hybrid cars. While the draft policy had proposed a 50 per cent waiver on road tax and registration fees for strong hybrid cars priced up to ₹30 lakh, the final policy dropped the proposal after stakeholder consultations, retaining the benefits only for electric cars (e-cars).

   

Under the new policy, only electric 3Ws (e3Ws) and N1 category light commercial vehicles (LCVs) — goods vehicles with a gross vehicle weight of up to 3.5 tonnes — will be eligible for fresh registration in Delhi from January 1, 2027. From April 1, 2028, only electric 2Ws (e2Ws) will be newly registered in the national capital. E-cars priced up to ₹30 lakh will continue to receive a 100 per cent exemption from road tax and registration charges.

 

Executives at major 2W and 3W manufacturers — which continue to derive the bulk of their sales from ICE-powered vehicles, with only a small electric presence in their product portfolios — said the policy announcement came as a shock. They said the larger worry is that Delhi’s policy could become a template for other states, accelerating the transition to electric mobility beyond what manufacturers had planned and forcing them to revisit future product launches and investment plans.

 

In fact, Tarun Mehta, chief executive officer of e2W maker Ather Energy, said in a post on X that the Delhi government’s new policy should become a benchmark for other states. “What stands out is not just the scale of the investment, but the way the policy has been designed. The combination of incentives, phased electrification mandates, and charging infrastructure creates a very strong foundation. More critically, if Delhi can become a majority electric vehicle (EV), then it has the opportunity to become a benchmark for the rest of the country," he said.

 

Tata Motors — one of India’s top electric carmakers — also said that other states should emulate Delhi. “Delhi has once again demonstrated progressive leadership... This policy provides long-term direction for the industry, strengthens confidence in India’s EV ecosystem, and can serve as a benchmark for other states pursuing cleaner urban mobility,” a spokesperson for Tata Motors said.

 

In a press conference on Monday afternoon, Delhi Chief Minister Rekha Gupta said the policy had been allocated an investment of ₹15,000 crore. “Of the total investment, a sum of ₹7,000 crore will be specially earmarked for boosting EVs in the city in the four-year period, while ₹8,000 crore will be allocated towards EV infrastructure and tax exemptions in the next four years,” she said.

 

The new policy offered financial incentives for EV buyers. Buyers of e2Ws will receive ₹30,000 in the first year of the policy, with the incentive reducing to ₹20,000 in the second year and ₹10,000 in the third year. Buyers of e3Ws will receive ₹50,000, ₹40,000, and ₹30,000 over the three years, while buyers of electric N1 category LCVs will receive ₹1 lakh in the first year.

 

A senior executive of a leading commercial vehicle maker said the company was studying the policy in detail. “It is a step in the right direction. We will have to see how this pans out, as the incentive for e3Ws is higher over three years and their cost is lower,” he observed.

 

Saket Mehra, partner, Grant Thornton Bharat, said Delhi’s new EV policy was “arguably one of the strongest demand-side signals” seen in India’s urban mobility transition. More importantly, it marked a shift from incentive-led adoption to a mandate-driven market transformation by combining targeted purchase incentives with phased electrification mandates, charging infrastructure expansion, and a dedicated institutional framework for implementation, he added.

 

The new policy introduced scrappage incentives for replacing older vehicles with electric models. Owners scrapping old 2Ws will receive ₹10,000, while 3Ws and N1 category vehicles will qualify for ₹25,000 each. Owners scrapping Bharat Stage-IV or older four-wheelers will receive ₹1 lakh.

 

The policy also laid down mandatory electrification targets for the school transport fleet. Schools will have to ensure that at least 10 per cent of owned or hired buses are electric within two years of the policy coming into force, with the share rising to 30 per cent by the third year.

 

The policy also proposed setting up 32,000 EV charging points across Delhi. The expansion will be supported through the Centre’s PM Electric Drive Revolution in Innovative Vehicle Enhancement, which provides financial support for EV charging infrastructure, along with any remaining assistance available under the earlier Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles and allocations under the Delhi EV Policy Budget.

 

India recorded around 18.9 million 2W sales in calendar year 2024, while Delhi accounted for roughly 450,000 registrations, or just over 2 per cent of the national total. Larger states such as Uttar Pradesh and Maharashtra contribute higher shares.

 

Mehra said the new policy provided long-term demand visibility across key vehicle segments and was expected to catalyse investments in vehicle manufacturing, charging infrastructure, battery manufacturing and recycling, and EV financing.

 

“Importantly, it positions electrification not merely as a mobility agenda but as a broader urban sustainability and air-quality imperative. The true differentiator, however, will be execution — particularly around timely deployment of charging infrastructure, streamlined implementation of incentives, grid readiness, and coordination among multiple implementing agencies,” he added.