Prime Minister Shehbaz Sharif has approved the initial draft of Pakistan’s new automotive policy and directed officials to make several changes, including placing greater emphasis on technology transfer and expanding employment opportunities for skilled Pakistanis, according to officials and a draft document.
The proposed policy covers the 2026-31 period, with the government seeking to promote local manufacturing, electric vehicles and technology transfer in the automotive sector.
Sharif directed officials to give greater priority to technology transfer in the new policy and increase employment opportunities for skilled Pakistani workers, according to the officials.
The draft proposes further tax incentives for small electric vehicles to encourage their adoption and local production. It also proposes imposing a concessional sales tax rate of 1% on parts used for the local production of all electric vehicles, according to the draft.
The draft further proposes exempting electric vehicles from federal excise duty, capital value tax and advance income tax. For electric-vehicle charging stations, the draft proposes keeping customs duty on raw materials and parts at a concessional rate of 1% to support the development of charging infrastructure.
However, the proposed policy calls for ending existing sales-tax concessions for hybrid vehicles, according to the document.
The government is also seeking to increase local production of electric vehicles and their components as part of efforts to develop the domestic automotive industry and reduce reliance on imported vehicles and parts. The new auto policy is expected to be finalized after further consultations. Pakistan will hold discussions with the International Monetary Fund in October on the proposed policy, according to officials.