Finance Ministry Makes Electric Vehicles Default for Government Staff Cars, Doubles Price Ceiling to ₹20 Lakh

The Ministry of Finance has revised guidelines for government staff cars, making electric vehicles the default and preferred choice for central government ministries and departments. According to an Office Memorandum issued by the Department of Expenditure, government bodies must prioritize electric vehicles when replacing their existing conventional staff cars.

Alongside the mandate, the purchase price ceiling for electric staff cars has been doubled. The Net Dealer Price ceiling for procuring electric vehicles has been fixed at ₹20 lakh. In comparison, the price ceiling for internal combustion engine vehicles, which includes petrol, diesel, and hybrid models, remains at ₹10 lakh.

The Finance Ministry stated that these policy changes aim to promote electric mobility, reduce dependence on fossil fuels, and account for prevailing market prices along with the overall operating costs of vehicles over their lifespan.

Despite the new mandate, the guidelines do not completely prohibit the purchase of conventional vehicles. Ministries and departments facing operational constraints where electric vehicles are impractical may seek exemptions. To do so, departments must submit a proper justification to the Department of Expenditure on a case-by-case basis. Such proposals require the approval of the secretary of the concerned ministry and the concurrence of its financial adviser.

Additionally, the department clarified that existing instructions issued on September 1, 2022, which mandate the hiring of electric vehicles by government departments, remain in force. Departments looking to hire conventional vehicles must also follow the same formal approval process.

The latest memorandum partially modifies the September 2022 guidelines governing the procurement and hiring of government staff cars. The ministry confirmed that all other existing conditions regarding entitlement, procurement, and hiring will remain unchanged, with purchases continuing to be governed by the General Financial Rules, 2017. The revised instructions have come into force with immediate effect.

"The government's decision to make electric vehicles the default choice for staff cars and raise the price ceiling to ₹20 lakh is a significant structural push for the domestic EV sector. By addressing both the cost differential and administrative preferences, public procurement can create a steady, reliable demand baseline for clean mobility solutions, setting a practical benchmark for institutional adoption." — Dr. Shishir Gupta, Founder & CEO, StartupLanes