PM Gives In-Principle Approval to Auto Policy 2026-31

ISLAMABAD, September 9 (APP-style): Prime Minister Muhammad Shehbaz Sharif has given in-principle approval to the new Auto Policy 2026-31, aimed at promoting local manufacturing, enhancing exports, encouraging electric and hybrid vehicles and reducing dependence on imported fuel.

Under the proposed policy, import duties on hybrid vehicles in several engine-capacity categories are proposed to be reduced from 50 percent to 30 percent over a five-year period. Duties on hybrid trucks would be reduced from 30 percent to 15 percent, while those on hybrid commercial vehicles would come down from 60 percent to 30 percent and hybrid buses from 30 percent to 15 percent.

The draft policy also proposes an environmental levy of 10 percent on vehicles with engine capacity of 2,001cc to 3,000cc and 19.5 percent on vehicles above 3,000cc. The levy is estimated to generate around Rs142.79 billion over five years, with the funds proposed to support exports and research and development.

The policy places particular emphasis on increasing local production and localization of auto parts, technology transfer, investment and the development of an export-oriented automotive industry.

The government also intends to promote electric and hybrid vehicles as part of efforts to modernize the transport sector and reduce the country’s dependence on petroleum imports.

The proposed Auto Policy 2026-31 will be shared with the International Monetary Fund for consultation. Following IMF clearance, the policy will be placed before the Economic Coordination Committee, the federal cabinet and subsequently Parliament for approval through the relevant legislative/finance process.

The policy is expected to provide a new framework for the automotive sector for the next five years, with a greater focus on competitiveness, investment, localization, technology transfer and exports.