Pakistan's draft auto policy 2026-31: what it proposes and the debate around it
The draft auto policy 2026-31 targets $6bn in exports, lower import tariffs and more new energy vehicles, with 9% sales tax on plug-in hybrids. What it says and why it is debated.
Pakistan's government has prepared a draft Auto Industry Development Policy for 2026-31 and sent it to the federal cabinet for approval. It is not final yet, so its terms could still change.
What the draft proposes
- Exports: a target of $6 billion in vehicle and auto parts exports over five years
- Lower import tariffs: gradually reducing duties on imported vehicles and parts to increase competition
- New energy vehicles (NEVs): promoting electric and other low-emission vehicles
- Local manufacturing: stronger local production of vehicles and parts
- Plug-in hybrids (PHEVs): a proposed 9% sales tax, half the standard 18% rate
What it could mean for buyers
- Lower tariffs and tax cuts could make some vehicles, especially plug-in hybrids, cheaper
- More brands and models could enter the market
- Prices will depend on the final policy, exchange rates and how carmakers pass on savings
The debate
The draft has drawn different views.
Concerns raised by Dawn's editorial (23 October): - A tax break for plug-in hybrids, which still use petrol, may not cut fuel imports as much as support for fully electric cars would - The export target may be hard to reach unless foreign brands allow their Pakistani partners to export - Cheaper imported parts could put pressure on local parts makers
Arguments made in favour of hybrid incentives: - Supporters say hybrids and plug-in hybrids use less fuel and produce fewer emissions than petrol-only cars - They see hybrids as a practical step while charging stations are still limited in Pakistan
Key numbers
| Item | Figure |
|---|---|
| Policy period | 2026 to 2031 |
| Export target | $6 billion over 5 years |
| Proposed sales tax on PHEVs | 9% |
| Standard sales tax | 18% |
What happens next
The cabinet will review the draft. Changes are possible before it becomes official policy. We will update this article when the final version is approved.
Related
- What does Pakistan export?
- The Indus and Tarbela: Pakistan's energy lifeline
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