Pakistan's new Auto Policy proposes an increase in export targets, requiring car exports to reach 4% during 2026-27 and 20% during 2030-31.

The target for auto parts manufacturers would also increase from 5% to 15%. The policy proposes linking local auto parts manufacturers with global supply chains to increase exports.

It also proposes a Duty and Tax Remission for Exporters scheme and the establishment of an Auto Parts Export Council. The policy proposes measures to reduce vehicle prices and support electric vehicle adoption through tax incentives and other financial relief.

The draft will be discussed with the International Monetary Fund through online consultations and during the upcoming economic review before receiving final approval.

Electric vehicles are proposed to receive exemptions from federal excise duty, capital value tax and withholding tax, while customs duty on electric vehicle charging station equipment would be set at 1%.

The proposed policy also recommends increasing the financing limit for electric vehicles to PKR 10 million (US$ 36,000) and extending the loan repayment period from three to five years.

Electric vehicles, plug-in hybrid electric vehicles and range-extended electric vehicles would receive equal treatment under the proposal. The government also plans to reduce customs duties on conventional vehicles by up to 80% over the next five years. The policy proposes these reductions alongside measures concerning fuel-efficient and environmentally friendly vehicles.

The policy proposes new consumer protection rules under which manufacturers would be responsible for any price increases after a vehicle has been booked. Customers would also have to be provided with a delivery date at the time of booking. The document sets out six principles for vehicle manufacturers and proposes penalties for companies that fail to meet performance targets, as well as incentives for those that achieve their targets.