Pakistan is moving toward a major restructuring of its auto sector tariffs under the upcoming budget and new auto policy, with proposals aimed at cutting duties and promoting electric and hybrid vehicles.

Policy documents indicate that the government is considering eliminating additional customs duties while gradually reducing regulatory duties under the National Tariff Policy framework. The changes are expected to be implemented in phases rather than all at once.

A key feature of the proposed plan is the inclusion of a wider range of new energy vehicles, beyond just battery electric cars. This includes hybrid vehicles, which are being brought into the revised tax structure.

Under the recommendations, customs duty on hybrid vehicle parts is proposed at 5 percent, while duties on auto parts overall may also be set at around 5 percent.

For fully assembled vehicles, a higher rate of around 10 percent customs duty is being considered. Meanwhile, duty on completely knocked-down (CKD) kits is suggested to remain in the 5 to 10 percent range, depending on the category.

The draft policy also suggests easing or removing certain duty conditions for electric motorcycles, rickshaws, and other electric vehicles to encourage wider adoption of cleaner transport options.

Officials say the proposed changes are part of broader efforts to simplify the tariff structure, support industrial growth, and shift the auto market toward more energy-efficient technologies.