The Union Cabinet on Wednesday approved a two-year scheme to phase out BS-IV and older commercial vehicles from the Delhi-NCR region, replacing them with BS-VI or electric alternatives, as part of a broader push to address the region’s severe air pollution problem.
Scheme structure and outlay
The scheme carries a total financial outlay of Rs 9,585 crore, it said in a statement. Of this, the central government will contribute Rs 5,041 crore, while participating states — Delhi, Haryana, Rajasthan, and Uttar Pradesh — are expected to provide an estimated Rs 1,601 crore in tax concessions. It will be implemented jointly by the Ministry of Road Transport and Highways and the Ministry of Petroleum and Natural Gas, and funded through the National Capital Region Planning Board under the Ministry of Housing and Urban Affairs.
Approximately 2.07 lakh vehicle owners stand to benefit, covering 1.91 lakh trucks and 16,329 buses.
The pollution case
According to a joint report by the Automotive Research Association of India and The Energy and Resources Institute, the transport sector accounts for 14% of PM 2.5, 40% of carbon monoxide, and 63% of nitrogen oxide emissions in Delhi-NCR. Trucks and buses, which make up just 3% of the total fleet, account for 36% of PM2.5 emissions from the transport sector. A single pre-BS vehicle emits the equivalent of 14 BS-VI compliant vehicles, while even a BS-IV vehicle emits 2.7 times more than its BS-VI counterpart.
The central government will offer a 5% interest subvention on vehicle loans for five years, monthly fuel vouchers of up to Rs 4,800 per vehicle, depending on category, and lump-sum incentives for EV purchases or Certificate of Deposit trading. State governments will waive registration fees, offer up to 100% motor vehicle tax concession on new vehicles and 50% on used vehicles for 10 years, and waive pending liabilities on scrapped vehicles. Participating auto OEMs will offer 8% discounts on ex-showroom prices.
Rules by vehicle category
BS-III and older vehicles must be scrapped at Registered Vehicle Scrapping Facilities. BS-IV vehicles may be scrapped or sold outside NCR to non-NCAP cities. In Delhi specifically, light goods vehicles bought under the scheme must be electric, and buses must be BS-VI CNG or electric only. Government vehicles are excluded.
Implementation
The scheme will run through a fully digital, integrated portal that enables real-time eligibility checks, automated interest subvention claims, and fuel voucher credits. An Empowered Committee, chaired by the Cabinet Secretary, with participation from Niti Aayog, relevant ministries, and chief secretaries of NCR states, will oversee monitoring. At the ground level, district collectors and district magistrates will be responsible for implementation.
Central government benefits will continue for five years from the date of new vehicle registration, extending the impact beyond the two-year enrolment window.
