Delhi unveils EV policy 2.0: Up to ₹1 Lakh incentive for scrapping old vehicles

Delhi has rolled out EV Policy 2.0 through its 2026 budget, introducing a “scrappage first" model that ties subsidies directly to the retirement of older polluting vehicles. The policy carries a ₹200 crore allocation and aims to accelerate the replacement of the city’s ageing fleet of petrol and diesel vehicles.

Scrappage-Linked Incentives

Under the new rules, if you are seeking the full incentive, you must submit a Certificate of Deposit confirming they have decommissioned a Delhi-registered BS-IV or earlier petrol or diesel vehicle. For the first year, private electric cars priced below ₹15 lakh will qualify for up to ₹1 lakh in support, capped at the first 100,000 applicants. Electric two-wheelers receive a flat ₹10,000 subsidy, moving away from the earlier battery-capacity formula. Electric three-wheelers in the L5M segment get ₹25,000. Owners opting to convert existing petrol or diesel cars to electric using approved kits will be eligible for a ₹50,000 grant.

Tax Reform and the "Luxury Loophole"

On the tax front, electric vehicles retain a full exemption from road tax and registration fees until 31 March 2030. However, the government has closed the luxury-vehicle loophole: the waiver applies only to cars with an ex-showroom price up to ₹30 lakh. Models above that threshold will pay standard rates.

Chief Minister Rekha Gupta said the measures are designed to make EVs accessible to middle-class households. “Charging an EV should be as easy as charging a mobile phone," she added during the budget presentation.

Massive Public Transport Expansion

Public transport receives ₹8,374 crore in the transport department’s allocation. The government plans to induct 6,130 new electric buses in the coming financial year, taking the total electric bus fleet to 12,000 by 2029. All 400-plus vehicle dealerships in Delhi must install at least one public charging station, part of a target to reach 18,000 charging points city-wide by the end of 2026. A dedicated battery recycling programme has also been introduced, with the Delhi Pollution Control Committee overseeing second-life applications for lithium-ion packs.

Delhi already leads the country in EV adoption rates, yet the transition is not without friction. Officials noted that ₹140 crore in subsidy claims from the earlier policy remain pending because of verification delays.

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