Delhi plans to limit the number of petrol and diesel-powered cars a family can purchase and impose a ban on the sale of fuel-inefficient motorcycles and scooters, according to a draft policy aimed at reducing pollution.

The proposed measures are part of the city's efforts to address pollution, which often leads local authorities to ban certain construction activities, close schools, and disrupt flights during the winter season in a city of over 30 million people.

Under Delhi's new electric vehicle (EV) policy, the city government will waive certain local taxes on the purchase of hybrid vehicles, aligning their incentives with those given to electric vehicles, while introducing a new levy of 50 paise per litre on petrol sales, according to the 74-page draft reviewed by media sources.

The primary goal of the policy "is to unlock the next phase of EV adoption, reduce air pollution, and contribute to India's energy independence and net-zero targets," the draft states.

Each year, ahead of the winter season in Delhi, calm winds and low temperatures trap pollutants from various sources, including vehicles, industries, and crop residue burning in nearby fields, leading to higher levels of harmful toxins in the air.

Delhi launched the first phase of its EV policy in 2020, which resulted in a rise in the share of electric models to 12% of all new vehicle sales, including motorcycles and cars, by 2024.

According to the policy document, under the second phase, no new sales of petrol, diesel, or gas-powered two-wheelers will be permitted from April 1st, 2027. The policy also includes a cash incentive of up to US$ 350 for the purchase of electric bikes and scooters.

Impact on residents

Two-wheelers are important for many Delhi residents, and the new measures may affect lower- and middle-income groups who rely on them, rather than cars, to navigate the city's often congested roads.

The 2027 ban on the sale of fossil fuel two-wheelers will impact manufacturers such as Bajaj Motors, TVS, and Hero MotoCorp. However, some of the negative effects may be offset by increased sales of their electric two-wheelers.

The policy will also limit the number of fossil fuel cars a household can purchase to two, with a target of achieving 30% EV penetration by 2030, up from approximately 2.7% in 2024.

"All private car owners in Delhi will be required to purchase only electric cars if they intend to own a third or subsequent car registered to the same residential address," the policy document states.

The policy, which is expected to cost the Delhi government Rs. 28.6 billion (US$ 335.5 million), is subject to revision based on feedback from car manufacturers and other stakeholders.

It is unclear when the policy will be finalised or how it will be funded. The city government is also considering tax waivers for hybrid vehicles to match the incentives offered to electric vehicles, potentially lowering their cost by up to 15%.

This move mirrors a similar initiative by the neighbouring state of Uttar Pradesh. The policy is expected to benefit companies like Toyota Motor and Maruti Suzuki, but it may present challenges for homegrown manufacturers such as Tata Motors and Mahindra & Mahindra, which focus on electric vehicles.