Why Delhi is moving beyond subsidies to mandates.
Delhi’s first EV Policy was among the earliest state-level EV policies in the country. Like many first-generation EV policies, it was built around a simple assumption: reduce the upfront cost of electric vehicles, expand charging infrastructure and allow the market to respond. That approach made sense when EVs were still an emerging technology and consumer confidence had to be built. With the Delhi Cabinet approving EV Policy 2.0 on 29 June, and the revised policy coming into effect on 1 July 2026, the city has now entered the next phase of its electric mobility transition.
Six years of implementation have made one thing clear: creating an EV market and completing the transition are two very different challenges. Purchase incentives are effective in lowering entry barriers and attracting early adopters, but they cannot indefinitely sustain the pace of adoption. If left entirely to voluntary consumer choice, the transition is likely to remain uneven across vehicle segments and slower than governments’ climate and air quality ambitions.
Nearly two decades after electric vehicles first entered the Indian market, the transition remains far from complete. Delhi’s registration data illustrate this well. EVs account for 13 per cent of all new vehicle registrations in 2025–26, but the aggregate figure masks stark differences across vehicle segments. Anyone travelling through Delhi today can hardly miss the e-rickshaw that have become an integral part of the people’s everyday commute. Electric three-wheelers have also already crossed 80 per cent of new registrations, whereas two-wheelers, the city’s largest vehicle segment, remain only around 10 per cent electric. Private cars have also witnessed relatively slow adoption, with EVs accounting for only 12 per cent of new registrations. The evidence suggests that incentives worked where economics already favoured electrification, and some uptake with the consumer subsidies. But where cost, consumer behaviour, and infrastructure remain barriers, voluntary adoption has plateaued. That is precisely where the next generation of EV policy needs to intervene.
This is where Delhi EV Policy 2.0 becomes an interesting policy experiment. Rather than simply increasing subsidies, it represents one of the earliest attempts by an Indian state to move towards the second generation of EV policy, one that combines incentives with regulatory mandates. It is about time EV policy moved beyond a subsidy-led approach. Subsidies can create demand; they cannot complete the transition. Instead of relying entirely on consumers and businesses to voluntarily make the shift, the policy introduces clear timelines for phasing out new registrations of internal combustion vehicles in selected segments, while also setting electrification requirements for government fleets, school buses and fleet aggregators.
As the EV policy expands beyond purchase incentives, implementation can no longer rest with a single department. EV Policy 2.0 attempts to address this by distributing responsibilities across specialised agencies, including Delhi Transco Limited (DTL), the Environment Department, the Delhi Pollution Control Committee (DPCC), the Education Department and various urban local bodies, while retaining the Transport Department as the overall nodal agency for implementation. Collectively, these agencies are responsible for charging and battery-swapping infrastructure, emissions assessment, battery recycling, land aggregation, school fleet compliance and overall policy implementation. The policy requires each department to develop detailed implementation roadmaps and standard operating procedures, but it remains less clear on how progress across departments will be monitored, how inter-agency coordination will be ensured, and what happens if implementation timelines are missed.
Another area where the policy appears to step back is financing. The first policy recognised that lowering the upfront cost alone was not enough. It complemented purchase incentives with interest subvention and concessional finance for commercial EVs, acknowledging that access to affordable credit is as important as the purchase price itself. Those provisions do not feature in Policy 2.0, even though affordable finance continues to be one of the biggest barriers for commercial EV adoption. This becomes particularly important as electrification mandates now extend to commercial fleets. For small fleet operators, owner-drivers and thousands of gig workers who own the vehicles they use for deliveries, the transition is less constrained by willingness to adopt EVs than by the ability to finance them.
Now, the implications extend well beyond vehicle buyers. For businesses, the question is no longer whether to prepare for electrification, but how quickly they can adapt. Fleet operators can no longer plan future vehicle procurement assuming conventional vehicles will remain an option indefinitely. Manufacturers, dealerships and charging infrastructure providers now have clearer signals on where future demand is likely to emerge, allowing long-term investments to be aligned with regulatory direction rather than short-term subsidy windows. More importantly, the policy signals that the direction of EV policymaking itself is changing. Delhi may be among the first states to adopt this approach, but it is unlikely to be the last. As more states and cities revise their EV policies, they have an opportunity to learn from Delhi’s implementation experience and build on it and design policies that are better equipped for the next phase of India’s EV transition.
