How Delhi's EV policy compares with Maharashtra, Tamil Nadu and Gujarat; ICRA explains

Electric vehicle adoption in the national capital is expected to accelerate under the Delhi EV Policy 2026, but affordability constraints, limited financing and dependence on imported battery components will continue to pose challenges, according to domestic rating agency ICRA.

In a thematic report on the Indian electric vehicle industry, ICRA said the Delhi EV Policy 2026 is "one of the landmark EV policies implemented in any state in India", and is expected to accelerate electrification of two-wheelers, three-wheelers, commercial vehicles and public transport.

The agency said the policy marks "a decisive move away from subsidy-led uptake towards mandate-driven electrification" by combining mandatory EV adoption with restrictions on fresh registrations of internal combustion engine (ICE) vehicles in select segments.

Under the policy, only electric three-wheelers and N1 goods carriers below 3.5 tonnes will be eligible for registration from January 1, 2027, while registration of new petrol and diesel two-wheelers will end from April 1, 2028.

It also provides subsidies, scrappage incentives and exemptions from road tax and registration fees.

"By combining the financial incentives... with regulatory mandates, (the policy) makes it one of the most interventionist EV frameworks in the country," ICRA said.

According to the report, the policy strengthens the long-term business outlook for the EV ecosystem by providing regulatory clarity and a defined roadmap for deeper EV penetration across vehicle segments.

However, it cautioned that EV adoption "is likely to remain constrained owing to affordability concerns, limited financing access for small fleet operators and individual buyers, and continued dependence on imported battery cells, critical minerals and EV components."

ICRA said the policy is "a credit positive" for electric vehicle manufacturers, charging infrastructure providers, battery-swapping operators and EV financiers, while demand for manufacturers and component suppliers focused largely on ICE vehicles could moderate over time.

Comparison with other states

Unlike Maharashtra, Tamil Nadu, Karnataka and Gujarat, Delhi has imposed mandatory electrification targets for school buses, delivery fleets and government commercial vehicle fleets, besides phasing in restrictions on registrations of ICE vehicles.

The report said Delhi also offers among the highest scrappage incentives in the country and has laid out a detailed framework for battery swapping, battery traceability and recycling.

It rated Delhi's policy framework as "very high" in overall strength compared with "high" or "moderately high" for other leading EV states.

The report noted that Delhi already has a higher EV penetration than the national average.

EV penetration in the capital recovered to 8.7% in FY2026 and rose further to 12.9% in the year-to-date FY2027, compared with the all-India level of 9.4%. The new policy is expected to accelerate the next phase of EV adoption in the city.

ICRA said the policy could unlock a multi-fold demand opportunity, as current electrification stands at around 7% for two-wheelers, 6% for light commercial vehicles and 33% for three-wheelers, while new registrations in these segments are slated to become fully electric under the policy.