The study is being conducted to give "scientific inputs" on the matter, the department's secretary Ashutosh Sharma said.
Recently, Pema Khandu, the chief minister of Arunachal Pradesh, had demanded a separate time zone for the northeast.
"The DST has been conducting studies on this, looking at what is the potential of energy saving if you have two different time zones," Mr Sharma said.
"One can actually save energy because the sunrise and sunset timings are different (in the country), but the office timings are one across the nation," he added.
The study is also expected to cover the overall impact, especially on the transportation system.
One of the arguments is that early sunrise means that by the time they start their day, almost half the day has passed.
This means an early sunset which requires extra use of lights in both homes, offices and public places, hampering the productivity.
Similar is the case with the archipelagos of the Andaman and Nicobar and the Lakshadweep where sunrise and sunset timings are different from the mainland.