Government Staff Cars: ₹20 Lakh EV Ceiling and Case-by-Case Relaxation for ICE Vehicles

The news

The Finance Ministry has directed all ministries and departments to make electric vehicles the default and preferred choice for staff car procurement. In an office memorandum dated November 10, the Department of Expenditure revised the net dealer price ceiling for EVs to ₹20 lakh, double the ₹10 lakh limit set for petrol, diesel and hybrid vehicles. The 2022 instructions had fixed a ceiling of ₹6 lakh.

Ministries and departments shall ordinarily procure EVs when their existing internal combustion engine staff cars are condemned or replaced. If a ministry considers EV deployment impractical and proposes to buy an ICE vehicle, it must send a duly justified proposal to the Department of Expenditure for case-by-case relaxation, with the approval of the administrative secretary and concurrence of the financial adviser. The 2022 instructions mandating EV hiring continue; hiring an ICE vehicle also requires case-by-case relaxation.

Which scheme promotes electric vehicle adoption in India?

The Faster Adoption and Manufacturing of Electric Vehicles scheme, known as FAME India, was launched in 2015 under the National Electric Mobility Mission Plan to encourage EV adoption through demand incentives. FAME India Phase II began in 2019 with an outlay of ₹10,000 crore and focused on public and shared transport, charging infrastructure, and demand incentives for electric two-wheelers, three-wheelers, and four-wheelers. The National Electric Mobility Mission Plan 2020 was launched in 2013 as the broader policy framework for faster adoption and manufacturing of hybrid and electric vehicles. The Production Linked Incentive scheme for automobile and auto components, announced in 2021, also includes incentives for advanced chemistry cell battery manufacturing to support domestic EV production.

What was the earlier arrangement?

The 2022 instructions prescribed guidelines for procurement and hiring of cars by ministries and departments and fixed the net dealer price ceiling at ₹6 lakh. Those instructions also mandated the hiring of EVs, a requirement that continues under the new memorandum.

How will the new policy work?

The ₹20 lakh ceiling for EVs is double the ₹10 lakh ceiling for ICE vehicles, reflecting prevailing market prices and vehicle lifecycle costs. The preference at replacement creates a gradual path for fleet electrification rather than requiring immediate replacement. Where EV deployment is not practical, a ministry can seek relaxation through a proposal that requires the administrative secretary's approval and the financial adviser's concurrence before referral to the Department of Expenditure.