PM Shehbaz approves draft auto policy with 500,000-vehicle target

According to officials, a special facility has been introduced on the Punjab Emergency Helpline 15 to provide immediate psychological support.

ISLAMABAD: Prime Minister Shehbaz Sharif has approved the draft of Pakistan’s new Auto Industry Policy 2026–2031, setting ambitious targets for vehicle production, exports and the transition towards new energy vehicles.

According to sources, the draft will now be shared with the International Monetary Fund (IMF) for review before being placed before the Economic Coordination Committee (ECC) and the federal cabinet for final approval.

The proposed policy comes after the expiry of the Auto Industry Development and Export Policy 2021–26 on June 30, 2026. The new framework seeks to revive demand in the domestic automobile market, attract fresh investment and strengthen Pakistan’s position in regional automotive markets.

Under the proposed five-year plan, Pakistan aims to raise annual vehicle production beyond 500,000 units and increase automobile exports to $1 billion. The government also intends to accelerate the development of new energy vehicles, with electric and hybrid vehicles targeted to account for 30% of total car sales by 2031.

The draft also proposes incentives for domestic production of batteries, expansion of charging infrastructure and development of hybrid vehicle technologies as part of the government’s broader push towards cleaner and more efficient transportation.

Tariff reforms form another key component of the proposed policy. The government is considering a gradual reduction in duties on imported hybrid vehicles and a reduction in average vehicle import taxes from 10.6% to 7.4% by 2030. The draft proposes a simplified four-tier duty structure of zero, five, 10 and 15 per cent, while duties on fully assembled vehicles would be capped at 15%.

The proposed framework also envisages gradually withdrawing regulatory and additional customs duties on used vehicles by 2030, with the aim of creating a more predictable market environment for consumers and investors.

Sources told Minute Mirror that major differences with industry stakeholders have already been addressed through consultations led by an Ishaq Dar-headed steering committee. The government is now expected to seek IMF input before submitting the draft to the ECC and federal cabinet.

Officials say the policy is designed to increase local manufacturing, promote technology transfer, facilitate vehicle financing and reduce upfront costs for buyers while bringing Pakistan’s automotive industry closer to international standards on emissions and fuel efficiency.

The Ministry of Industries is expected to issue the final policy notification after completion of the required approval process.