Finance Ministry Makes Electric Vehicles Default Choice For Staff Cars

The Ministry of Finance has made electric vehicles the default for government staff cars, raising the purchase ceiling to Rs 20 lakh to encourage electric mobility while retaining the Rs 10 lakh limit for internal combustion engine vehicles.

Government Mandates Electric Vehicles for Staff Cars

The Ministry of Finance has made electric vehicles (EVs) the default choice for government staff cars and raised the purchase price ceiling for such vehicles to Rs 20 lakh, compared with Rs 10 lakh for petrol, diesel and hybrid vehicles. According to an Office Memorandum issued by the Department of Expenditure on Tuesday, central government ministries and departments will now be required to give preference to electric vehicles when replacing their existing conventional staff cars.

"EVs shall be the default and preferred choice for procurement," the memorandum stated. Under the revised instructions, the Net Dealer Price (NDP) ceiling for procurement of electric staff cars has been fixed at Rs 20 lakh, while the ceiling for Internal Combustion Engine (ICE) vehicles, including petrol, diesel and hybrid vehicles, remains Rs 10 lakh.

Rationale Behind the EV Procurement Shift

The Finance Ministry said the changes have been introduced to promote electric mobility, reduce dependence on fossil fuels and account for prevailing market prices and the overall cost of operating vehicles over their lifespan.

Exceptions for Conventional Vehicles

However, the revised instructions do not completely prohibit the purchase of conventional vehicles. According to the memorandum, ministries and departments can seek permission to purchase petrol, diesel or hybrid vehicles if they find electric vehicles impractical for their requirements. Such proposals must be supported by proper justification and submitted to the Department of Expenditure for relaxation on a case-by-case basis. The proposal must also have the approval of the Secretary of the concerned ministry or department and the concurrence of its Financial Adviser.

Continuation of Existing Hiring Guidelines

The department further clarified that the existing instructions issued on September 1, 2022, mandating the hiring of electric vehicles by government departments will continue to remain in force. Departments seeking to hire conventional vehicles will also have to obtain approval through the same process. The latest memorandum partially modifies the September 2022 guidelines governing the procurement and hiring of government staff cars. The ministry said all other conditions relating to entitlement, procurement and hiring of staff cars will remain unchanged, and purchases will continue to be governed by the General Financial Rules, 2017. The revised instructions have come into force with immediate effect.

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