Pakistan unveils new auto policy, targets $6 billion in vehicle exports

The federal government has announced a new automotive policy aimed at gradually reducing vehicle prices, promoting electric vehicles (EVs) and increasing automobile exports to $6 billion.

According to Prime Minister’s Adviser Haroon Akhtar, the policy has come into effect immediately.

Speaking at a news conference in Islamabad on Saturday alongside Federal Information Minister Attaullah Tarar, Haroon Akhtar, the Prime Minister’s Adviser on Industries, said the new policy would gradually reduce vehicle prices for middle- and upper-income groups.

He said the prime minister wanted to make smaller cars more affordable and was opposed to imposing additional taxes on small vehicles.

Akhtar said the government had formulated the policy after extensive consultations.

While promoting the growth of large-scale industries remained a key government priority, he noted that Pakistan was currently under an International Monetary Fund (IMF) programme, making tax collection from the automotive sector necessary.

He added that conventional vehicles would remain subject to taxation, while electric vehicles would receive various incentives.

The adviser said the government was placing particular emphasis on promoting electric mobility. The financing limit for electric vehicles has been increased from Rs2 million to Rs10 million, while EVs have also been exempted from several types of taxes.

He added that negotiations with the IMF were ongoing regarding the proposed one per cent tax on electric vehicles.

According to Akhtar, the government has set a target of converting 30 per cent of vehicles to electric power within five years, a goal he expects to achieve ahead of schedule. He added that regional tensions had increased the importance of electric vehicles, while their prices had also risen.

Akhtar revealed that Pakistan’s current automobile exports stand at approximately $200 million annually. Under the new policy, the government aims to increase exports to $6 billion.

He said the government would extend all possible support to automobile manufacturers exporting vehicles. However, local manufacturers that fail to export their products will face financial penalties. Manufacturers failing to meet their prescribed export targets will also be subject to fines.

The adviser stressed the need to increase the local manufacturing of automobile parts, saying the new policy would also help reduce vehicle production costs. He noted that Pakistan currently has 16 car manufacturers.

He further announced that 45 additional standards and safety features had been introduced to improve vehicle safety and quality, bringing locally manufactured vehicles closer to international standards.

Under the new policy, manufacturers will not be allowed to charge advance payments exceeding 20 per cent of a vehicle's price.

Akhtar also clarified that vehicles with engine capacities below 1,000cc would not be subjected to any additional taxes.