Pakistan is close to finalizing its new auto policy, which will introduce changes to car imports, localization, tariffs, electric vehicles and vehicle safety.

Prime Minister’s Adviser on Industries and Production Haroon Akhtar Khan briefed the Senate Standing Committee on Industries and Production on Wednesday about the proposed policy.

He said the government wants to lower vehicle costs for consumers without undermining local manufacturing. He added that excessive tariff reductions could make imported completely built-up (CBU) vehicles more competitive and hurt domestic production.

The government is therefore seeking greater protection for local manufacturers while promoting localization and exports.

Haroon Akhtar said the policy has been finalized at the committee level and will now move through the remaining approval process. The draft will also be shared with the International Monetary Fund (IMF).

The Law Minister is expected to brief Prime Minister Shehbaz Sharif on the policy this week. It will then be submitted to the federal cabinet, while relevant parliamentary committees are expected to review it within two weeks.

The government has also proposed duty drawback incentives for exports of locally manufactured vehicles. Auto-parts industry representatives said high taxes remain a major obstacle to increasing exports.

Used vehicle imports

The committee also examined changes to used vehicle import schemes.

Haroon Akhtar said the personal baggage scheme was abolished after being misused, while the gift scheme would continue.

Under the proposed rules, a vehicle brought through the gift scheme would have to remain registered in the recipient’s name for one year and could not be transferred during that period.

Officials said one vehicle can be gifted once every three years and that no additional tax has been imposed on vehicles imported through the scheme.

PAMA representatives warned that increased imports of older used vehicles could put pressure on local manufacturers. They also cautioned that allowing large numbers of vehicles more than five years old could create long-term problems for the domestic industry.

Haroon Akhtar said commercial vehicle imports have not been banned.

Vehicle safety

The government is also introducing stricter requirements for the safety and environmental standards of imported vehicles.

Haroon Akhtar said imported vehicles would need quality, environmental and fitness certificates issued through the Pakistan Standards and Quality Control Authority (PSQCA).

He said 62 additional clauses had been added to the relevant legislation, while safety standards would be developed by PSQCA under the Ministry of Science and Technology.

The adviser also acknowledged that extensive checks had slowed commercial vehicle imports but said environmental and quality requirements would remain mandatory.

Senator Saleem Mandviwalla raised concerns about the effect of changes in the import regime on employment in the local auto industry. He said around 2.2 million jobs linked to the sector could be affected.

The committee reviewed the proposed policy covering vehicle imports, localization, consumer prices, exports, electric vehicles and domestic manufacturing.