ISLAMABAD (The Thursday Times) — The government has announced a new auto policy that it says will gradually bring down the price of every vehicle except luxury models, cut duties on imported cars and parts every year for five years, and push for 30 per cent of new vehicles sold in Pakistan to be electric by 2030.
Information Minister Attaullah Tarar and Haroon Akhtar Khan, the prime minister’s adviser on industries and production, set out the policy at a news conference in Islamabad on Saturday. It rests on six pillars: cheaper vehicles, especially for the middle and lower-middle classes, exports, localisation, safety, electric vehicles and transparency. Tarar said cabinet approval was under way and the government wanted to end speculation before it was complete.
“The prices of all vehicles, except luxury vehicles, will come down,” Khan said. Duties on fully built imported cars, on assembly plants and on components will be cut each year until tariffs become competitive after five years. Nothing changes for petrol cars under 1,000cc, which Tarar said many people still depend on.
The electric push: the government proposes sales tax of 1 per cent on pure electric vehicles, 6 per cent on range-extended EVs and 9 per cent on hybrids, subject to approval from the International Monetary Fund. EVs priced up to $50,000 would pay no capital value tax, withholding tax or federal excise duty; costlier ones would be taxed as luxury goods. The State Bank’s limit on car financing would rise from Rs3 million to Rs10 million for all EVs, with loans running five years instead of three. Sales tax on charging equipment falls to 1 per cent and customs duty on it is removed, and the government will cover the viability gap for charging stations until demand builds. Khan said the 30 per cent target was “about to happen sooner than that”.
Export or pay: localisation becomes mandatory, with targets for each manufacturer. Carmakers that export will get a 5 per cent duty drawback on local taxes and levies, with up to a further 10 per cent as exports grow, but only if they meet both their export and local manufacturing targets. “But if you do not achieve the targets, a penalty will be imposed as well,” Khan said.
Safety: the policy brings in 45 safety standards in line with the UN’s WP.29 vehicle regulations, for cars made in Pakistan and for imported used cars. Khan said they would be “the world’s safest vehicles — both manufactured and used”.
Because Pakistan is in an IMF programme, the incentives are meant to be revenue-neutral. The money will come from petrol and diesel vehicles above 1,000cc and will pay for export rebates and research and development. Tarar said decades of protectionist tariffs had failed to bring innovation or value addition to the local industry. Sales of electric two-wheelers rose to 240,000 in 2025-26 from 60,000 the year before, after the New Energy Vehicle Policy 2025-30 was launched.
