Delhi Drafts Bold EV Policy with Tax Waiver for Hybrids

In a move that could reshape the electric vehicle policy landscape in India, the Delhi government’s draft EV Policy 2.0 has proposed tax waivers for hybrid vehicles for the first time. The inclusion of strong hybrid and plug-in hybrid electric vehicles (SHEVs and PHEVs) under the policy marks a shift from a BEV-exclusive approach to a broader clean mobility framework.

For hybrid vehicles with an ex-showroom price of up to Rs 20 lakh, the draft suggests full exemptions on road tax and registration fees. “This is expected to bring down price of such vehicles and encourage car users to suo-motto shift to usage of such vehicles,” the policy draft states. The benefits will apply once SHEVs/PHEVs are formally defined by the Ministry of Heavy Industries, Ministry of Road Transport & Highways, or a similar entity.

The draft mentioned, "This is expected to bring down price of such vehicles and encourage car users to suo motu shift to usage of such vehicles."

Such incentive disbursal to SHEVs and PHEVs will only be applicable once the Ministry of Heavy Industry/Ministry of Road Highway & Transport or a similar Government Entity defines SHEVs/PHEVs.

Road tax and registration fees will be fully waived for all Battery Electric Vehicles (BEVs) throughout the duration of this policy. However, for electric cars, this exemption will apply only to those with an ex-showroom price of Rs 20 lakh or below.

According to automakers, this policy could dilute the focus on full electrification, potentially discouraging investment in BEV technologies. Many believe that if Delhi takes the lead, other states may follow, which could undermine the momentum for developing a robust all-electric vehicle ecosystem.

In the five years since the policy was introduced, the National Capital Territory of Delhi has established itself as a national leader in electric vehicle (EV) adoption. During this period, the share of EVs in total vehicle sales in Delhi increased nearly fourfold, reaching an average of 12% in 2024.

In 2024, electric vehicle sales in Delhi saw a remarkable 30% increase compared to 2022, with a total of 82,081 EVs registered during the year.

Delhi's EV 2.0 Policy draft introduced an array of financial incentives designed to make electric mobility accessible and attractive. Buyers of electric two-wheelers are eligible for an incentive of Rs 10,000 per kilowatt-hour, with a maximum benefit of Rs 30,000 per vehicle. For women, the government is offering a higher incentive of Rs 12,000 per kilowatt-hour, capped at Rs 36,000, available to the first 10,000 women holding valid driving licences.

Three-wheeler owners also stand to gain, with incentives up to Rs 45,000 offered for electric auto-rickshaws and goods carriers. Owners of four-wheelers goods vehicles can avail incentives up to Rs 75,000, and school buses powered by electricity will be eligible for incentives reaching as high as Rs 15 lakh for the first 200 vehicles.

Incentives also cover retrofitting, where car owners can get 50% of the retrofit kit cost, capped at Rs 50,000. These incentives, valid until March 31, 2028, are in addition to those offered under central government schemes like PM E-DRIVE. Additionally, vehicle owners scrapping older internal combustion engine (ICE) vehicles can receive incentives ranging from Rs 10,000 to Rs 20,000, while those replacing aged CNG autos with electric ones can earn up to Rs 1 lakh.

The road tax and registration fees for passenger vehicles vary based on the type of fuel and the vehicle's cost, ranging from as low as 4% of the vehicle price for petrol and diesel cars priced up to Rs 6 lakh, to as high as 12.5% for vehicles costing above Rs 20 lakh. Registration for EVs was fully waived.

Delhi has committed to developing a robust charging ecosystem by aiming to establish 13,700 public charging stations by 2030. These will be located at every 5 km interval and within every 1 sq km grid across the city. The government will provide up to Rs 15 lakh in subsidies for LT-level public charging stations and Rs 30 lakh for HT-level hubs.

Incentives extend to semi-public charging as well, with a 50% capital subsidy for AC charging points and up to Rs 20,000 per DC point. The first 1,000 battery swapping stations will also receive a one-time subsidy of up to Rs 1.2 lakh.