PM Shehbaz approves draft of Pakistan's auto policy 2026-31, seeks changes

Prime Minister Shehbaz Sharif has approved the initial draft of Pakistan's auto policy 2026-31 and directed officials to revise it, according to officials and a draft document. The policy, covering the next five years, aims to boost local manufacturing, electric vehicle adoption and technology transfer. Pakistan will discuss the plan with the IMF in October.

What is Pakistan's new auto policy 2026-31?

Pakistan's auto policy 2026-31 is a five-year framework designed to expand local vehicle manufacturing, encourage electric vehicles and increase technology transfer in the automotive sector. It proposes tax incentives for electric vehicles, ends sales-tax concessions for hybrids, and pushes local production of EV components to cut reliance on imports.

What changes has PM Shehbaz sought in the auto policy draft?

Sharif directed officials to place greater emphasis on technology transfer within the new policy, according to the officials. He also asked them to expand employment opportunities for skilled Pakistani workers in the sector.

These instructions came after the PM reviewed the initial draft, which covers the 2026-31 period.

What tax incentives does the auto policy offer for electric vehicles?

The draft proposes further tax incentives for small electric vehicles to encourage their adoption and local production. It also proposes a concessional sales tax rate of 1% on parts used to locally produce all electric vehicles, according to the draft.

In addition, the draft proposes exempting electric vehicles from federal excise duty, capital value tax and advance income tax.

What does the policy propose for EV charging infrastructure?

For electric-vehicle charging stations, the draft proposes keeping customs duty on raw materials and parts at a concessional rate of 1%. This is meant to support the development of charging infrastructure alongside the push for greater EV adoption.

Will hybrid vehicles still get tax concessions under the new policy?

No. The proposed policy calls for ending existing sales-tax concessions for hybrid vehicles, according to the document.

What are the policy's targets for local production?

The government is seeking to increase local production of electric vehicles and their components. This is part of broader efforts to develop the domestic automotive industry and reduce reliance on imported vehicles and parts, according to the draft.

When will Pakistan's auto policy 2026-31 be finalized?

The new auto policy is expected to be finalized after further consultations. Pakistan will hold discussions with the International Monetary Fund in October on the proposed policy, according to officials.