Pakistan’s proposed auto policy targets EVs, exports and lower car prices

Prime Minister Shehbaz Sharif has approved the final draft of Pakistan’s Automotive Industry Policy 2026-31, clearing it for submission to the federal cabinet for consideration and formal approval. The proposed five-year framework aims to make the vehicle sector more competitive, expand local manufacturing and support exports.

The policy sets a cumulative automotive export target of $6 billion over its five-year period. Government officials have said the plan is designed to shift the sector towards an export-oriented model while encouraging greater localisation by vehicle assemblers and parts manufacturers.

A proposed Automotive Development Levy on conventional internal-combustion-engine vehicles would be used to support incentives for electric vehicles and exports. Officials said vehicles with engine capacities of up to 1,000cc would be exempt from the proposed levy.

The draft also contains consumer-protection measures for vehicle buyers. Manufacturers would not be allowed to demand more than 20 per cent of a vehicle’s price as an advance payment at the time of booking, a provision intended to address the practice of charging high upfront amounts.

The government is also proposing measures to promote electric mobility, including financing support for EV purchases. Officials have linked the push towards EVs with the need to reduce Pakistan’s dependence on imported petroleum products and the resulting pressure on the import bill and inflation.

The policy is not yet in force because it still requires cabinet consideration and the prescribed approval process. Its eventual impact on vehicle prices, investment, local parts production and exports will depend on the final version adopted by the government and the implementation of its incentives, levy and manufacturing targets.