Pakistan’s proposed new Auto Policy has set higher export targets for car manufacturers and auto parts makers as the government seeks to increase the industry’s contribution to global supply chains.
Under the proposal, car manufacturers would be required to raise exports to 4 percent of production during 2026-27 and eventually reach 20 percent by 2030-31. The export target for auto parts manufacturers would increase from 5 percent to 15 percent.
The policy proposes linking local auto parts manufacturers with international supply chains. It also includes a Duty and Tax Remission for Exporters scheme and calls for the establishment of an Auto Parts Export Council.
The draft policy also contains measures aimed at reducing vehicle prices and increasing electric vehicle (EV) adoption through tax incentives and other financial support.
EVs would be exempt from federal excise duty, capital value tax and withholding tax under the proposal. Customs duty on equipment for EV charging stations would be set at 1 percent.
The government has also proposed increasing the financing limit for EVs to Rs. 10 million and extending the maximum loan repayment period from three years to five years. Electric vehicles, plug-in hybrid electric vehicles and range-extended electric vehicles would receive the same treatment under the proposal.
For conventional vehicles, the policy proposes reducing customs duties by up to 80 percent over the next five years.
The proposal also includes new consumer protection measures. Manufacturers would be responsible for price increases after a vehicle has been booked, while buyers would have to be given a delivery date when placing an order.
The policy sets six principles for vehicle manufacturers and proposes penalties for companies that fail to meet performance targets. Manufacturers achieving their targets would be eligible for incentives.
The draft will be discussed with the International Monetary Fund (IMF) through online consultations and during the upcoming economic review before it is given final approval.
