Pakistan plans to significantly increase local production in the auto industry, with automakers required to raise localization from 10 percent to 40 percent over the next five years under the proposed new auto policy.

Prime Minister’s Adviser on Industries and Production Haroon Akhtar Khan said the policy has been designed to support local manufacturing, exports and consumers while maintaining vehicle quality and safety standards.

He said mandatory localization targets would encourage automakers to source more parts from local manufacturers and create additional employment in the country.

The policy would also bring local auto-parts manufacturers into the export framework. Companies exporting auto parts would be eligible for Drawback of Local Taxes and Levies (DLTL) incentives.

Haroon Akhtar said the draft currently circulating in the market is not final and should not be treated as the approved policy.

On imported vehicles, he said the requirement for pre-inspection certificates would continue. Stakeholders have also agreed to a vehicle verification process through the Pakistan Standards and Quality Control Authority (PSQCA).

The proposed framework would allow third-party companies to inspect vehicles for quality and safety. Certification issued by an authentic body in the exporting country would also be accepted.

To prevent fraudulent certification, foreign certification companies would be required to establish subsidiary offices in Pakistan. PSQCA would register third-party inspection companies under the prescribed standards.

The adviser said compliance with 69 regulations under the WP-29 Convention would also be mandatory to strengthen vehicle safety standards.

He added that consultations with commercial vehicle importers’ associations on proposed changes to vehicle imports had been completed.