Auto Parts Industry Warns Over NEV Policy
Pakistan’s auto parts industry has warned that a draft New Energy Vehicle policy could damage local manufacturing, even though the policy aims to lower car prices and promote electric vehicles. The warning comes from a former chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers, writing in Dawn’s Business and Finance Weekly on November 2, 2026. His account is an industry view, not a government announcement, and the policy itself remains a draft.
The Auto and Auto Parts Policy 2026-31 has turned into a mystery, the writer says. Multiple drafts are circulating, and no one outside close government circles knows the exact contents. Prime Minister Shehbaz Sharif approved it in principle in early September, and it was sent for IMF review late last month.
The stakes are large. The country’s 1,200 auto parts manufacturing companies employ 300,000 people directly and 1.8 million indirectly, according to the article. The sector holds $4 billion in investment, with production valued at $6 billion in 2026. It supports more than 13 car assemblers and contributes Rs600 billion in annual taxes.
Auto parts industry: six shocks in the draft
The draft sets out welcome goals: grow exports, promote New Energy Vehicle adoption, lower car prices and increase transparency. The writer argues that the actual measures in the draft point the other way, and he lists six major shocks for the domestic industry. The first is aggressive duty cuts on completely built units, which are fully imported cars. Those duties would fall progressively to 15 per cent by 2031. By contrast, India’s duty on such cars stands at 120 per cent, Thailand’s at 80 per cent and Indonesia’s at 52 per cent. The writer says such a cut would trigger massive imports and strain the current account.
The second shock is subsidised imports of New Energy Vehicles. Import duties on completely built units priced under $15,000 would fall to 5 per cent. Sales taxes would be 1 per cent on battery electric vehicles, 6 per cent on range-extended electric vehicles and 9 per cent on plug-in hybrid vehicles. A $15,000 car costs over Rs4 million, out of reach for most Pakistani households, so the writer says the state would give up tax revenue to cut prices for a small, affluent minority, while putting low-income factory workers out of jobs.
The third and fourth shocks concern parts for conventional petrol and diesel cars. Duties on existing, localised parts would fall from 46 per cent to 30 per cent in 2026-27, and then to 15 per cent by 2030-31. Duties on non-localised conventional parts would fall from 30 per cent to 10 per cent, and then to 5 per cent. Local makers already face a 34 per cent structural cost disadvantage against regional peers, the writer says, so cheaper imports would wipe out plant investments and jobs.
The fifth shock concerns New Energy Vehicle parts themselves. Locally produced parts common to both conventional and electric vehicles would carry a 20 per cent import duty, which the writer says makes local manufacturing unfeasible, since assemblers will import them in knocked-down kits instead. Non-localised electric vehicle parts would face only a 1 per cent customs duty.
What the industry wants instead
What is the Auto and Auto Parts Policy 2026-31?
It is a draft policy for Pakistan’s car and parts industry, approved in principle by the prime minister in early September 2026 and sent for IMF review late last month. A final version has not been published.
Why is the auto parts industry worried?
Makers say draft tariff cuts on imported cars and parts, plus low local content rules for electric vehicles, would favour imports over local production and put jobs at risk.
How many jobs does the sector support?
About 300,000 people directly and 1.8 million indirectly, across 1,200 auto parts manufacturing companies, according to the Dawn article.
What tariffs does the industry propose instead?
The association proposes minimum duties of 50 per cent on completely built units, 40 per cent on localised parts and 30 per cent on non-localised parts.
What is a New Energy Vehicle?
A New Energy Vehicle covers battery electric vehicles, range-extended electric vehicles and plug-in hybrid vehicles, all of which use electric power in place of, or alongside, a petrol or diesel engine.
