The Finance Ministry on 11 November 2026 issued a notification making electric vehicles (EVs) the 'default and preferred choice' for procurement of staff cars across all central government ministries and departments, with the order taking effect immediately. The directive, issued by the ministry's Department of Expenditure, marks a significant shift in the Centre's fleet policy, pushing fossil-fuel vehicles firmly to the margins of government procurement.

Key Changes in the New Order

The notification has doubled the net dealer price ceiling for EV procurement by central government bodies to ₹20 lakh, while the ceiling for internal combustion engine (ICE) vehicles — covering petrol, diesel, and hybrid cars — has been set at ₹10 lakh. The sharp pricing differential is designed to tilt procurement decisions structurally toward EVs. The order also mandates a preference for EVs when hiring vehicles for government use.

According to the notification, 'Going forward, Ministries and Departments shall ordinarily procure Electric Vehicles (EVs) at the time of condemnation or replacement of their existing ICE staff cars. EVs shall be the default and preferred choice for procurement.'

When ICE Vehicles May Still Be Considered

The order does not impose an outright ban on ICE vehicle procurement, but raises the bar significantly. Any ministry or department seeking an ICE vehicle must submit a duly justified proposal to the Department of Expenditure for a case-by-case relaxation. Such a request must carry the approval of the Secretary of the concerned administrative ministry or department, along with the concurrence of the Financial Adviser. A similar approval mechanism applies if hiring of an ICE vehicle is deemed necessary.

Continuity With Earlier Policy

The new directive builds on instructions issued on 1 September 2022, which had already mandated the hiring of electric vehicles across central government entities. All other terms governing entitlement, procurement, and hiring of vehicles remain unchanged. Procurement continues to be governed by the General Financial Rules (GFR), 2017, as amended.

Why This Matters

The order is explicitly framed around three objectives: promoting electric mobility, reducing dependence on fossil fuels, and accounting for the lifecycle cost advantages of EVs over conventional vehicles. Notably, by doubling the EV price ceiling while capping ICE vehicles at half that amount, the government is effectively using procurement policy as a demand-creation tool — a signal to the domestic EV market that the state itself will be a major buyer. This comes amid India's broader push toward its net-zero commitments and the government's ongoing FAME scheme to accelerate EV adoption. For fleet operators and EV manufacturers, a mandatory government shift of this scale could meaningfully boost order volumes in the near term.