Pakistan is planning to introduce a new mechanism to import, refurbish and re-export used vehicles under its draft auto policy for 2026-31, as the government seeks to boost exports and attract investment into the automotive sector.

The proposed framework would allow licensed companies to import used vehicles, refurbish them in Pakistan and export them to international markets under a model based on Dubai’s Jebel Ali system. The vehicles would not be allowed to enter the domestic market.

Officials say the proposal has gained momentum after the Gulf war and is being strongly backed by the Special Investment Facilitation Council, which views the initiative as a potential source of export earnings at a time when Pakistan is struggling to lift outbound shipments.

The draft policy is currently under discussion with the International Monetary Fund and is expected to be presented to the federal cabinet once those consultations are completed.

Under the proposed scheme, operators would receive duty suspension incentives through the Export Facilitation Scheme to encourage investment in refurbishment facilities and help integrate Pakistan into the global automotive value chain.

Only registered companies would be eligible to operate in the sector. Firms would need to be incorporated under the Companies Act and demonstrate adequate financial and technical capacity, including a business plan covering refurbishment and exports.

They would also be required to obtain approval from the relevant ministries as a sectoral export project, register under the Export Facilitation Scheme and show that their facilities meet infrastructure standards verified by the Engineering Development Board.

Vehicles brought in under the scheme would have to be re-exported within nine months of import. Limited extensions could be granted in exceptional cases subject to valid justification and additional financial guarantees. Failure to re-export within the prescribed time would leave operators exposed to action by the Federal Board of Revenue under applicable rules.

The proposal is part of a broader government effort to open new export channels and generate additional foreign exchange earnings while protecting the local market from an influx of imported used vehicles.