For years, the white sedan with a government sticker has been a familiar sight in New Delhi. Most of those cars run on petrol or diesel. That is now set to change. The Finance Ministry has issued a notification making electric vehicles the "default and preferred choice" for staff cars across all central ministries and departments, with immediate effect.

The order comes from the ministry's Department of Expenditure. It does more than state a preference. It changes the money involved. The net dealer price ceiling for EV purchases has been doubled to Rs 20 lakh. The ceiling for internal combustion engine (ICE) vehicles, including petrol, diesel and hybrid cars, has been fixed at Rs 10 lakh.

What the order actually requires

The order does not ask departments to scrap working cars overnight. The switch is tied to the normal replacement cycle. "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," the office order states.

Exceptions are possible, but they are made difficult. A ministry that finds an EV impractical cannot simply buy a petrol car. It must send a duly justified proposal to the Department of Expenditure, which will consider relaxation case by case. The proposal needs the approval of the Secretary of the administrative ministry or department and the concurrence of its Financial Adviser. The same process applies to hiring ICE vehicles. Departments must also keep following the Department of Expenditure's September 1, 2022 instructions requiring hired government vehicles to be electric.

All other rules on entitlement, procurement and hiring of cars under the 2022 office memorandum stay unchanged. Purchases will continue to be governed by the General Financial Rules (GFR), 2017, as amended.

Why the price gap matters

The two price ceilings are the most important part of the order. With Rs 20 lakh for EVs and Rs 10 lakh for ICE cars, the government is recognising that electric cars cost more at purchase. It is also signalling that it will pay that premium. The order says the ceilings take into account prevailing market prices and lifecycle costs. That points to the usual argument for EVs: they cost more up front but less to run and maintain over the years.

The government's stated aims are to promote electric mobility and reduce dependence on fossil fuels. Policy messaging on EVs has so far focused mainly on private buyers. This order puts the government's own fleet into the shift.

The road ahead

The government is one of the country's largest single buyers of vehicles, so a steady replacement-led switch could create predictable demand for electric sedans and SUVs in the sub-Rs 20 lakh range. It could also push faster charging infrastructure around government offices. How quickly the change shows on the roads will depend on how many ICE cars are due for replacement and how strictly the exception process is applied.

With inputs from IANS