Delhi 2026-2030 EV Policy Draft Raises Incentives and Sets a Phaseout Timeline for ICE Two- and Three-Wheelers

Overview

This report discusses the Delhi 2026-2030 EV policy draft. The core of the draft is to increase demand-side EV incentives, exempt part of the vehicle taxes and fees, expand charging infrastructure, and set a phaseout timeline for new registrations of ICE two-wheelers and three-wheelers. The policy is currently in a 30-day public consultation period.

Core views

The core view is that if implemented, the policy would materially support electrification of two-wheelers, three-wheelers, small commercial vehicles, and some passenger EVs; the impact on traditional ICE OEMs is somewhat negative, especially if this policy becomes a template adopted by other cities. However, execution is challenging because buyers may purchase ICE two-wheelers or three-wheelers in the NCR region, which could weaken the practical effect of Delhi's local registration bans and limits.

Analysis framework

The report focuses on interpreting policy clauses, summarizing direct demand incentives, tax fee exemptions, scrapping-and-replacement support, charging infrastructure expansion plans, and the EV mandates timeline for different vehicle types and operating entities, and evaluating directional effects on the India auto and shared mobility supply chain.

Methodology notes

• policy_analysisVehicle Type and Registration Restriction Framework

  Assess incentives and restrictions by vehicle category

  Maps EV passenger cars, plug-in hybrid passenger cars, electric two-wheelers, electric three-wheelers, electric small commercial vehicles, fleet aggregators, delivery companies, government vehicles, and buses to subsidies, tax and registration fee exemptions, or new registration limits respectively.

• industry_impactElectrification Policy Transmission Framework

  Impact of policy incentives and phaseout schedules on OEMs and mobility operators

  Judges EV adoption gains through demand subsidies, lower operating costs, registration constraints, and infrastructure expansion, while also identifying sales pressure on traditional ICE models and implementation arbitrage risk.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Indian EV two-wheeler, three-wheeler and small commercial vehicle ecosystem

  Directly benefits from demand incentives and new registration restrictions

  Strengths

  Subsidies, tax and registration fee waivers, scrapping replacement, and charging infrastructure expansion jointly lower adoption barriers.

  Weaknesses

  The policy is still a draft, and execution requires cross-regional regulatory coordination.

  Comparison

  Compared with traditional ICE vehicles, EVs receive clearer support in Delhi for new local registrations and economics of use.

  Risks

  Consumers may shift to purchasing ICE vehicles in the NCR region, weakening policy effectiveness.

• Traditional ICE two-wheeler and three-wheeler OEMs

  Potentially negative impact

  Strengths

  In the short term, part of demand may be sustained through NCR-region sales or BS6-compliant models.

  Weaknesses

  Demand for ICE models in Delhi could be constrained if new registration restrictions are enforced.

  Comparison

  EV models gain policy tailwinds, while ICE models face schedule-based constraints.

  Risks

  If other cities replicate Delhi's policy, the negative impact may broaden.

• EV passenger cars and plug-in hybrid passenger cars

  Tax benefit beneficiaries

  Strengths

  EV passenger cars under Rs30 lakh enjoy a 100% road tax and registration fee waiver, while plug-in hybrids receive a 50% waiver.

  Weaknesses

  The report notes no direct subsidies for EV passenger cars.

  Comparison

  EV tax relief is stronger than that for plug-in hybrid models.

  Risks

  Demand pull depends on consumer price sensitivity, model availability, and charging accessibility.

Key data

• Policy coverage period2026-2030Planning cycle covered by the Delhi EV policy draft.
• Public consultation period30 daysCurrent draft is open for public review.
• EV passenger vehicle tax waiver thresholdBelow Rs30 lakh enjoy 100% road tax and registration fee exemptionNo direct purchase subsidy is provided for EV passenger vehicles.
• Plug-in hybrid passenger vehicle tax benefit50% road tax and registration fee exemptionFor plug-in hybrid models.
• New registration requirement for electric three-wheelersFrom January 1, 2027, only electric three-wheelers are allowed for new registrationsTimeline proposed in the draft for mandatory electrification of three-wheelers.
• New registration requirement for electric two-wheelersFrom April 1, 2028, two-wheelers will follow a similar electrification requirementTimeline proposed in the draft for mandatory electrification of two-wheelers.
• ICE registration restrictions for fleet and delivery companiesNo new registrations of traditional ICE vehicles after January 1, 2026BS6-compliant two-wheelers can continue to be registered until December 31, 2026.
• Government vehicles and busesAll new government vehicles and buses will be EVsDraft proposes electrification orientation for public-sector vehicle procurement.

Impact & implications

If implemented, the Delhi policy would improve the relative economics of EVs and alter purchase mix of two-wheelers, three-wheelers, fleets, and delivery vehicles through new registration limits. It supports EV makers, charging infrastructure, and demand for electric small commercial vehicles; it creates pressure on traditional OEMs dependent on ICE two-wheeler and three-wheeler sales. The spillover risk is that other cities may adopt similar templates, enlarging the impact on traditional ICE businesses.

Risks

• The draft is still in a 30-day public consultation period, and final policy clauses may be adjusted.
• Execution of the ICE new registration restrictions is difficult; buyers may travel to the NCR region to buy ICE two-wheelers or three-wheelers.
• Policy effectiveness depends on the pace of charging infrastructure expansion and local enforcement strength.
• If other Indian cities do not follow suit, Delhi's single-region policy may have limited impact on national OEM sales mix.
• The report contains disclosures of business relationships and potential conflicts of interest between Morgan Stanley and some covered companies.

What to watch

• The final version and implementation rules of the Delhi policy draft after public consultation.
• Actual enforcement of the post-January 1, 2026 ban on new registrations of ICE vehicles by fleet aggregators and delivery companies.
• Whether the electric three-wheeler new registration requirement takes effect as scheduled from January 1, 2027.
• Whether the electric two-wheeler new registration requirement takes effect as scheduled from April 1, 2028.
• Whether the NCR region becomes an ICE two-wheeler and three-wheeler bypass purchase channel.
• Whether other Indian cities adopt similar ICE phaseout schedules.
• The pace of Delhi's charging infrastructure expansion and coverage density.