ISLAMABAD: The draft Auto Policy 2026–31 has been approved for submission to the federal cabinet for consideration, proposing $6.01 billion in automotive exports over five years alongside major tariff cuts, electric vehicle tax concessions and penalties for manufacturers missing export targets.
The proposed policy seeks to reshape Pakistan’s automotive industry through gradual reductions in import tariffs, incentives for electric vehicle adoption and export-linked benefits for manufacturers. However, the measures remain proposals pending the required approval process.
The draft targets automotive exports of $6.01 billion by 2030–31, with annual exports projected to rise from $256.6 million in 2026–27 to $2.19 billion in 2030–31. It also proposes linking financial incentives to export performance and imposing penalties on manufacturers that fail to meet assigned targets.
Under the proposed tariff framework, duties on completely built-up vehicles and completely knocked-down kits would gradually decline, reaching as low as 15% by 2030–31. The proposals have raised concerns among local auto parts manufacturers over the potential impact of cheaper imports on domestic production.
The draft also proposes tax concessions for electric vehicles, including a 1% sales tax on battery electric vehicles, alongside changes to EV financing to make purchases more accessible. Other proposals include establishing the Pakistan Automotive Testing Institute and introducing measures to improve vehicle quality, safety standards and industrial competitiveness.