ISLAMABAD: Prime Minister Shehbaz Sharif has given in-principle approval to Pakistan’s new Auto Policy 2026-31, which will be shared with the International Monetary Fund before being submitted to the Economic Coordination Committee for approval, according to government sources.
The draft policy was discussed at a meeting chaired by PM Shehbaz Sharif. After IMF approval, the policy will be presented to the ECC and then the federal Cabinet. Following Cabinet approval, it will be submitted to Parliament.
The policy aims to create a favorable environment for investment in the local automotive industry, increase vehicle exports and domestic production, and promote advanced technologies.
Under the draft, the government has proposed reducing taxes on imported hybrid vehicles by 20% over the next five years. Import duties on hybrid vehicles with engine capacities of up to 800cc and between 851cc and 1,000cc could be reduced from 50% to 30%.
The draft also proposes gradually reducing duties on hybrid vehicles with engine capacities above 1,800cc. Duties on vehicles above 1,801cc could fall from 50% to 30% over five years, while duties on hybrid vehicles between 1,501cc and 1,800cc are also proposed to be reduced from 50% to 30%.
The government is also considering lower duties on hybrid commercial vehicles. Proposed reductions include cutting duties on hybrid trucks from 30% to 15%, hybrid commercial vehicles from 60% to 30% and hybrid buses from 30% to 15%.
To generate additional revenue, the draft proposes an environmental levy on larger vehicles. The revenue would be allocated toward promoting exports and research and development in the automotive sector.
Under the proposal, vehicles with engine capacities of 2,001cc to 3,000cc would face a 10% environmental levy, while vehicles of 3,001cc and above could be subject to a 19.5% levy. The proposed levy is estimated to generate Rs142.79 billion over five years.
Implementation of the new auto policy will begin after approval by the IMF, the ECC and the federal Cabinet.
