Long-Delayed Auto Policy 2026-31 Nears Decision as PM Reviews Draft Today
Prime Minister Shehbaz Sharif has convened a meeting to review the long-delayed auto policy 2026-31, with approval possible today if he is satisfied with the proposed framework, sources told ProPakistani.
The Automotive and Auto Parts Manufacturing Policy 2026–31 would set the direction for the country’s car industry over the next five years. The previous policy expired on June 30, 2026, leaving manufacturers and buyers waiting for clarity on where the sector heads next. Without a framework in place, carmakers held back decisions on production and pricing for months.
What the Draft Auto Policy 2026-31 Proposes
The prime minister had asked an inter-ministerial committee, headed by the law minister, to review and finalise the draft. The committee recommended changes that include a broad restructuring of the automotive sector.
The draft is not new to the prime minister’s desk. He gave it in-principle approval on September 9, directing that amendments on new-energy vehicle tax relief and tariff alignment be incorporated, UrduPoint reported at the time. Today’s meeting is the follow-up review of that amended draft.
The framework seeks to push locally made auto parts into global supply chains and raise the international competitiveness of domestic manufacturers. It also aims to draw investment, add local value and support electric vehicle adoption.
Another major proposal is the gradual reduction of automobile tariffs. Lower duties would make the industry more competitive and could bring car prices down for buyers.
The committee also recommended seven broad principles to reshape the industry, along with export targets meant to widen Pakistan’s footprint in international markets.
The Bigger Numbers Behind the Framework
The draft is more ambitious than headlines suggest. According to The News, the framework projects $17.7 billion in cumulative foreign exchange savings through localised completely knocked-down (CKD) assembly over five years, plus $4.586 billion in vehicle and auto-parts exports.
It also targets the protection of 2.5 million jobs and a net fiscal surplus of Rs21.11 billion for the state.
The tariff plan is bold. The proposal calls for a simplified four-tier customs structure — zero, 5, 10 and 15 per cent — that would cut the weighted-average import tariff from 15.7 per cent to 5.99 per cent by 2030. Duties on fully assembled imported cars would fall in stages, while duties on raw materials would be eliminated entirely.
For buyers, the promise is clear: cheaper imported cars and, over time, pressure on local assemblers to sharpen their pricing.
Why the Delay Hurt Both Carmakers and Buyers
Since June, the industry has operated without a compass. Manufacturers postponed investment decisions. Production planning suffered. Vehicle prices stayed in limbo because assemblers could not model future duties and taxes.
Buyers felt it too. Car loans in Pakistan rose to Rs407 billion in September 2026 despite the sales slump, which shows demand exists but confidence does not.
A firm decision today would give the industry the long-term framework it needs to plan investment and manufacturing. It would also clarify the future of electric vehicle incentives, a segment where Toyota Pakistan has questioned the tax benefits given to rival EV assemblers.
The EV angle deserves attention. The draft proposes special support for new energy vehicles, and buyers are already watching who pays and who gets exemptions under EV taxation rules. Local players such as Nora and Metro, which are targeting city commuters with electric vehicles, are building their businesses around the assumption that the state will back the segment. The policy will decide whether that bet pays off.
The original report on today’s meeting was published by ProPakistani.
What Happens Next
If the prime minister approves the framework today, the draft moves to the Economic Coordination Committee and then the federal cabinet for formal sign-off. The IMF is also expected to review it, given the tariff and revenue implications.
FAQs
What is the auto policy 2026-31?
It is Pakistan’s proposed five-year Automotive and Auto Parts Manufacturing Policy covering 2026 to 2031. It sets rules for local manufacturing, tariffs, electric vehicle incentives and export targets.
Could the auto policy 2026-31 lower car prices in Pakistan?
Possibly. The draft proposes gradual tariff cuts and a simplified duty structure, which could make imported cars cheaper and push local assemblers to compete on price. Final prices will depend on implementation.
What does the policy propose for electric vehicles?
It supports EV adoption through incentives, with earlier reports pointing to concessions on EV parts and charging infrastructure. Details depend on the final approved text.
What are the export targets in the auto policy 2026-31?
The framework projects $4.586 billion in vehicle and auto-parts exports over five years, alongside $17.7 billion in foreign exchange savings through localised assembly.
