Pakistan’s proposed new Auto Policy has set significantly higher export targets for automobile manufacturers and auto parts producers, while introducing measures aimed at making vehicles more affordable and promoting electric mobility.
Under the proposed policy, car manufacturers would be required to increase exports from 4% during 2026–27 to 20% by 2030–31. The export target for auto parts manufacturers would also increase from 5% to 15%.
The new policy aims to integrate Pakistan’s auto parts manufacturers into global supply chains and increase the country’s automotive exports.
To support this objective, the government has proposed a Duty and Tax Remission for Exporters (DTRE) scheme and the establishment of an Auto Parts Export Council.
The policy also includes measures aimed at encouraging local manufacturing and improving the competitiveness of Pakistan’s automobile industry in international markets.
The draft policy proposes several incentives for electric vehicles (EVs), including exemptions from federal excise duty, capital value tax, and withholding tax.
It also recommends reducing the customs duty on equipment used for EV charging stations to 1%.
The proposed financing limit for electric vehicles would be increased to Rs. 10 million, while the maximum loan repayment period would be extended from three to five years.
Electric vehicles, plug-in hybrid electric vehicles, and range-extended electric vehicles would receive equal treatment under the proposed framework.
The government has also proposed reducing customs duties on conventional vehicles by up to 80% over the next five years.
The measure is intended to help reduce vehicle prices while encouraging consumers to shift toward more fuel-efficient and environmentally friendly vehicles.
The draft policy also proposes stronger consumer protection measures. Manufacturers would be responsible for any increase in vehicle prices after a customer has completed the booking process.
Customers would also have to receive a confirmed delivery date at the time of booking.
The proposed framework sets out six key principles for vehicle manufacturers and introduces both penalties and incentives linked to performance.
Companies that fail to meet specified performance targets could face penalties, while manufacturers achieving their targets would be eligible for incentives.
The draft Auto Policy will be discussed with the International Monetary Fund (IMF) through online consultations and during the upcoming economic review before it is finalized and approved.
The government expects the policy to support exports, strengthen local auto parts manufacturing, promote electric vehicles, and improve affordability and consumer protection in Pakistan’s automobile market.
