Reframe India's EV policies to serve public

Two recent developments in electric mobility have caught the attention of policymakers and the public alike. They diverge significantly in both substance and design. Delhi’s draft EV Policy 2026 proposes subsidies of up to Rs 10,000 per kWh for electric two-wheelers, fixed incentives for electric auto-rickshaws, and a 100% waiver on road tax and registration fees for EV cars priced below Rs 30 lakh, while shifting from direct purchase subsidies to scrappage-linked incentives. In contrast, Karnataka has withdrawn tax exemptions for EV four-wheelers through the Karnataka Motor Vehicles Taxation (Amendment) Act, 2026, signalling a review of fiscal concessions for EVs.

Both cases illustrate the broader debate over intent versus outcome in public policy design and serve as strong examples for classroom teaching in public policy education.

Past central schemes, such as FAME (which ended in March 2024), subsidised personal EVs but raised questions about their utility for the larger public good. Roughly 16.16 lakh vehicles received incentives, yet the per‑kWh incentives meant higher‑range personal EVs received larger subsidies, disproportionately benefiting affluent households. Subsequently, the Union government replaced FAME with the PM E-Drive scheme, eliminating direct purchase subsidies for personal four-wheelers.

Since then, state EV policies have become the most important factor for buyers. Road tax waivers in Maharashtra, Delhi, Uttar Pradesh and Tamil Nadu (saving up to Rs 1.5 lakh per car) and registration fee waivers across most states exemplify how public funds have been directed toward individual vehicle owners rather than public mobility.

While intended to reduce pollution, these incentives have notable flaws. Linking subsidies to battery capacity means that a 90-kWh luxury SUV receives far more taxpayer-funded support than a 20-kWh electric scooter, despite serving fewer mobility needs. Moreover, India’s coal-heavy grid offsets much of the climate benefit, reducing the net impact on emissions.

More fundamentally, they raise equity concerns: the cost is spread among the public, but the benefits accrue disproportionately to a small, affluent segment. Most citizens rely on buses, shared autos or walking, yet continue to pay fuel cesses and road taxes that finance charging infrastructure for vehicles they may never own.

Scrappage incentives risk similar distortions. Replacing diesel cars with EVs does not reduce traffic congestion; it merely replaces a brown traffic jam with a green one. 

Bengaluru’s EV transition exemplifies that while EV registrations surged 1,275% between 2020 and 2024 (reaching ~3.4 lakh vehicles), this expansion only greened private mobility rather than shifted commuters toward buses. The Bengaluru Metropolitan Transport Corporation continues to operate around 6,800 buses, well below the 13,000 required for adequate service — highlighting a major shortfall in high-capacity public transport.

Delhi is now following a similar trajectory: the city needs nearly 14,000 buses to meet daily demand, but had only 5,835 by July 2025, down from 8,240 in early 2024, as CNG bus retirements outpaced new e-bus additions. The Economic Survey 2025-2026 notes that ridership fell 20% between 2019-2020 and 2024-2025, not due to lack of demand but due to unreliable services, long wait times, and poor route rationalisation. Nearly 60% of trips in Delhi are under 4 km, yet inadequate short-distance options push commuters toward private vehicles. Though fewer than 15% of households in Delhi own cars, private vehicles dominate road space. Across India’s four largest metros, they account for nearly 90% of the 3.1 crore registered vehicles, with Delhi alone accounting for more than half.

Without strengthening bus systems and last-mile connectivity, inefficiencies in urban mobility will persist. Shifting capital from exclusively subsidising private EV ownership to co‑investing in e‑bus fleets, depot electrification, and multimodal hubs that integrate buses and shared mobility corridors would yield greater mobility and equity gains. Reliable bus networks can cut travel time, costs, and exposure to congestion and pollution for the majority who do not own cars.

Nissy Solomon

The way forward requires a change of outlook: from subsidising vehicles to subsidising trips. The future of Indian mobility does not lie with affluent households in their subsidised sedans. It belongs to the commuters served by high-frequency electric buses and shared services. It is time our fiscal policies reflected that reality.

(The author is chairman, and Nissy Solomon is senior research associate at the Centre for Public Policy Research, Kochi)