Mahindra & Mahindra Limited and SML Mahindra Limited signed a Memorandum of Understanding with the Ministry of Road Transport and Highways on June 19, 2026, to join the central government’s fleet modernisation scheme in the Delhi-National Capital Region. The initiative aims to substitute older, highly polluting commercial cargo vehicles with modern, fuel-efficient alternatives to combat deteriorating air quality in the region. By offering structured discount incentives, this partnership seeks to accelerate the retirement of legacy transport fleets and transition towards sustainable transport solutions.
The MoRTH Fleet Modernisation Initiative
The fleet modernisation drive in the Delhi-National Capital Region operates under the overarching framework of the Voluntary Vehicle-Fleet Modernization Programme (V-VMP), commonly referred to as the National Vehicle Scrappage Policy. Launched by the central government on August 13, 2021, the national policy aims to systematically phase out unfit, high-emission vehicles to foster a circular economy and enhance road safety.
To address the severe winter pollution and year-round airshed challenges of the capital region, the Ministry of Road Transport and Highways (MoRTH) initiated a dedicated ₹9,585 crore fleet replacement scheme. Funded through the National Capital Region Planning Board (NCRPB), this targeted sub-initiative focuses on upgrading commercial public transport and cargo vehicles. The two-year programme aims to replace approximately 2.07 lakh vehicles, which includes 1.91 lakh trucks and 16,329 buses currently operating under Bharat Stage-IV (BS-IV) or older emission standards. Eligible operators are incentivised to transition to modern Bharat Stage-VI (BS-VI) compliant models or zero-emission electric vehicles.
Structure of Financial Incentives
The fleet modernisation programme is structured as a collaborative public-private partnership. To make the transition financially viable for commercial operators, the scheme combines manufacturing discounts with fiscal relief from both central and state governments.
Under the signed agreements, participating vehicle manufacturers provide a direct 8 per cent discount on the ex-showroom price of new commercial trucks and buses. For fleet operators opting for electric vehicles, this discount is capped at the amount applicable to an equivalent internal combustion engine vehicle within the same Gross Vehicle Weight (GVW) category.
The complete breakdown of financial support is detailed below:
| Incentive Category | Provider | Details of Benefit | Duration |
|---|---|---|---|
| Manufacturer Discount | Participating OEMs | 8 per cent discount on ex-showroom price of new trucks and buses | One-time at purchase |
| Interest Subvention | Central Government | 5 per cent interest subsidy on commercial vehicle loans | 5 years |
| Fuel Vouchers | Central Government | Monthly fuel vouchers worth up to ₹4,800 | 5 years |
| Tax Concession | Participating State Governments | Up to 100 per cent concession on motor vehicle tax | 10 years |
| Fee Waiver | Participating State Governments | Full waiver of vehicle registration fees | One-time |
To ensure transparency and speed, the government utilizes a fully digital platform to verify operator eligibility, disburse monthly fuel vouchers, and manage interest subvention claims. While the window to register under the programme is active for two years, the associated recurring benefits like loan subventions and fuel subsidies continue for five years from the date of vehicle purchase.
Role of Mahindra and SML Mahindra
The signing of the agreement on June 19, 2026, marks the entry of two major automotive players from the same corporate group: Mahindra & Mahindra Limited and SML Mahindra Limited. SML Mahindra Limited, formerly known as SML Isuzu, transitioned to its new corporate name following a significant acquisition completed in August 2025. Under this transaction, Mahindra & Mahindra acquired a 58.96 per cent controlling stake in the company, purchasing shares from Japan-based Sumitomo Corporation and Isuzu Motors. While SML Mahindra continues to operate as a publicly listed entity, its alignment with the parent group allows both brands to present a unified front for this environmental initiative.
Mahindra joins a coalition of India’s leading commercial vehicle manufacturers. Earlier in the same week, Tata Motors, Ashok Leyland, and its electric-vehicle arm, Switch Mobility, signed corresponding agreements with MoRTH. Collectively, these five manufacturers control approximately 75 per cent of India’s commercial truck and bus market. The inclusion of Mahindra and SML Mahindra ensures that the fleet modernisation program has the necessary industrial capacity and vehicle variety to replace aging cargo and passenger transport fleets across the capital region.
Broader Impact on Delhi-NCR Air Quality
The Delhi-National Capital Region suffers from chronic air quality issues, particularly during winter when meteorological factors compound local emissions. Heavy commercial vehicles, such as cargo trucks and passenger buses, represent a major source of particulate matter (PM 2.5 and PM 10) and nitrogen oxides (NOx). Although these heavy vehicles make up only a small fraction of the total registered vehicle population, they contribute a disproportionately high share of total road transport emissions. Replacing BS-IV and older heavy diesel vehicles with BS-VI models or electric variants is expected to result in a measurable reduction of these harmful pollutants.
The success of the initiative relies heavily on inter-state cooperation. Because air pollution does not respect political boundaries, the program is being implemented in close coordination between the central ministry and the state governments of Delhi, Haryana, Uttar Pradesh, and Rajasthan. By aligning state-level motor vehicle tax concessions and registration fee waivers, the initiative removes administrative barriers for inter-state transport operators. Furthermore, the programme accelerates India’s transition to a circular economy. Old vehicles are sent to formal Registered Vehicle Scrapping Facilities, where metals and other materials are recycled in an environmentally sound manner, reducing the demand for virgin resources and preventing illegal, polluting roadside dismantling.
Key Takeaways
- Mahindra & Mahindra Limited and SML Mahindra Limited signed a Memorandum of Understanding with the Ministry of Road Transport and Highways on June 19, 2026, to join the Delhi-NCR fleet modernisation initiative.
- SML Mahindra Limited was previously known as SML Isuzu before Mahindra & Mahindra acquired a 58.96 per cent controlling stake in the company in August 2025.
- The fleet modernisation scheme targets the replacement of 2.07 lakh vehicles, comprising 1.91 lakh trucks and 16,329 buses that comply with BS-IV or older emission norms.
- Participating vehicle manufacturers, including Mahindra, Tata Motors, Ashok Leyland, and Switch Mobility, provide an 8 per cent discount on the ex-showroom price of new commercial vehicles.
- The central government provides a 5 per cent interest subvention and monthly fuel vouchers worth up to ₹4,800 for five years to eligible beneficiaries.
- The overarching Voluntary Vehicle-Fleet Modernization Programme, also known as the National Vehicle Scrappage Policy, was launched on August 13, 2021.
