Ishaq Dar Led Committee Gives In-Principle Approval to New Auto Policy

An Ishaq Dar-led steering committee has reached an agreement on Pakistan’s new Auto Policy 2026-31 and will now take stakeholder input into account. Officials informed ProPakistani that the approved proposal will be presented to the ministry before being sent to the federal cabinet, along with the committee’s suggestions. The committee finalized the policy after evaluating concerns and recommendations from relevant stakeholders.

The Ministry of Industries and Production will now handle the proposal before it reaches the federal cabinet for approval. This is a significant development for the policy, which had faced numerous setbacks following FY27 budget discussions due to disagreements with the local automobile industry regarding the proposed framework for electric vehicles, hybrids, taxation, and localization.

The policy aims to promote electric and hybrid vehicles, encourage domestic manufacturing, boost technology transfer, and lessen Pakistan's reliance on imported petroleum products. The previous Auto Industry Development and Export Policy 2021-26 ended on June 30, 2026, and the lapse also led to the termination of the previous tax exemption for hybrid vehicles.

Starting July 1, the sales tax on hybrid electric vehicles (HEVs) and plug-in hybrids rose from 8.5% to 25%, causing vehicle prices to increase. This uncertainty has impacted the automobile market, with some manufacturers delaying vehicle deliveries. The government previously faced strong objections from local automakers over the proposed EV-centric framework.

Industry representatives had requested temporary relief for hybrid vehicles. While dealers and industry stakeholders generally backed the shift towards electric mobility, they advocated for a gradual approach centered on localization. They also cautioned that overly generous EV incentives without a clear transition strategy could exacerbate imports of fully built vehicles.

The final policy will soon be presented to the federal cabinet, with taxation, EV incentives, hybrid treatment, localization, and the speed of the transition being the main issues that have fueled the drawn-out policy debate.