Draft Policy Pushes for Aggressive Electrification, Threatening Core Revenue Streams of CNG Providers
Shares of Indraprastha Gas Ltd (IGL) plunged nearly 5 percent on Tuesday following the release of the Delhi government’s draft Electric Vehicle (EV) Policy 2.0, which outlines a roadmap to gradually eliminate CNG-driven three-wheelers and two-wheelers from the capital. The draft policy’s strong emphasis on transitioning to electric mobility poses a direct threat to IGL’s business model, as nearly 30 percent of its total gas volume comes from CNG vehicles, particularly autos and private cars in the National Capital Region (NCR).
At around 3 PM on the NSE, IGL’s shares were down 4.85 percent at ₹178.72, reacting to policy specifics that signal a disruptive shift in fuel usage patterns over the next few years. The proposed measures, if implemented, are likely to erode IGL’s long-term volume growth and market share in the CNG segment, analysts warn.
IGL stock drops to ₹178.72, down 4.85%
30% of IGL’s volume comes from CNG, primarily autos and cars
Draft policy aims to halt all new CNG auto registrations from Aug 15, 2024
Policy Highlights: Registration Ban, Permit Restrictions, Mandatory Conversions
According to the Press Trust of India (PTI) report citing the draft EV Policy 2.0, the Delhi government has laid out clear deadlines for eliminating internal combustion engine (ICE) vehicles from multiple segments:
CNG autorickshaw registrations will be banned starting August 15, 2024.
Renewals of CNG auto permits will be disallowed, with only e-auto permits issued thereafter.
All CNG autorickshaws over 10 years old must be replaced or retrofitted with battery-operated alternatives within the policy period.
From August 15, 2026, no petrol, diesel, or CNG-powered two-wheelers will be allowed in Delhi.
All municipal garbage vehicles must become fully electric by December 31, 2027.
These policy targets signal an aggressive timeline that could compress IGL’s growth prospects in its largest CNG consumption market. Notably, IGL has been a primary beneficiary of Delhi’s clean fuel transition away from petrol and diesel toward CNG, a trend now expected to pivot sharply toward battery electric vehicles (BEVs).
New CNG autos banned from registration post-August 15, 2024
CNG two-wheelers disallowed from August 15, 2026
Municipal vehicles to achieve 100% EV transition by December 2027
Market Sentiment Turns Cautious Amid Uncertainty Over Gas Distribution Business
The market reaction reflects investor concern over IGL’s long-term demand visibility, as the company’s gas distribution business is structurally dependent on vehicular CNG consumption, especially in Delhi and surrounding urban clusters. The company has made investments in expanding CNG infrastructure, including refueling stations and distribution lines, which now face the risk of underutilization if demand decelerates due to regulatory mandates.
Additionally, the draft policy includes a controversial clause for private car owners, recommending that individuals be allowed to buy electric cars only if they already own two vehicles. While this clause remains in draft stage and subject to public feedback, it indicates the state’s intent to push hard toward reducing dependency on all forms of fossil fuel, including cleaner ones like CNG.
IGL’s existing infrastructure faces underutilization risk
Long-term demand for CNG in autos, cars may shrink due to regulatory shifts
Private car ownership rules may indirectly limit CNG car expansion
Broader Implications for the Clean Energy Transition in India
Delhi’s EV Policy 2.0, if finalized in its current form, marks one of the most ambitious sub-national plans for transport electrification in India. While national-level policy has largely focused on offering subsidies and incentives to encourage EV adoption, Delhi’s draft goes a step further by proposing outright bans and mandatory transitions, signaling a shift from incentive-led to mandate-driven change.
Industry experts note that while such policies may accelerate EV penetration, they must be balanced with adequate infrastructure investment, availability of affordable EV options, and transitional support for legacy fuel-based businesses like IGL.
Draft policy indicates transition from incentive-based to mandate-based EV push
IGL and other CNG distributors face strategic realignment challenges
Implementation hinges on EV availability, affordability, and infrastructure readiness
