Finance ministry makes EVs preferred choice for government cars, sets ₹20 lakh cap

The Finance Ministry has asked ministries and departments to make electric vehicles (EVs) their "default and preferred choice" for staff cars, and set a price cap of ₹20 lakh for procurement of such vehicles.

The Finance Ministry said that, to promote electric mobility, reduce dependence on fossil fuels, and account for prevailing market prices and vehicle lifecycle costs, it is revising the Net Dealer Price (NDP) ceiling for procuring EVs and Internal Combustion Engine (ICE) vehicles.

Accordingly, the NDP ceiling for EVs has been set at ₹20 lakh, double the ₹10 lakh limit set for ICE vehicles (petrol/diesel/hybrid).

The 2022 instructions prescribing the guidelines regarding procurement and hiring of cars by Ministries/Departments had fixed the NDP ceiling at ₹6 lakh.

In an office memorandum dated November 10, the Expenditure Department said going forward, Ministries/Departments shall ordinarily procure Electric Vehicles (EVs) at the time of condemnation/ replacement of their existing ICE staff cars.

"EVs shall be the default and preferred choice for procurement," it said.

In cases where a Ministry/Department considers that procurement or deployment ofEVs is not practical and proposes to procure an ICE vehicle, a duly justified proposal would have to be sent to the Department of Expenditure for relaxation on a case-by-case basis.

"Such a proposal may be referred with the approval of the Secretary of the Administrative Ministry/Department and concurrence of the Financial Adviser," it added.

The Finance Ministry also said that all Ministries/ Departments will continue to adhere to the 2022 instructions mandating the hiring of EVs.

In cases where hiring of ICE vehicles is considered necessary, the proposal has to be referred to the Department of Expenditure for relaxation on a case-to-case basis.

The Finance Ministry's instructions comes in the backdrop of Government's efforts to accelerate the adoption of electric vehicles as part of its broader push towards clean mobility, energy security and reduction of carbon emissions.

The policy approach combines financial incentives, promotion of domestic EV manufacturing, development of charging infrastructure and measures to encourage greater consumer and institutional adoption.