Auto Policy 2026-31 Unveiled
The Pakistani government unveiled the Auto Policy 2026-31 to make vehicles affordable for middle and lower-middle classes while accelerating electric vehicle adoption.
The six-pillar framework covers low-cost cars, localisation, safety, exports, EV promotion, and transparency, according to tribune.com.pk.
Industry analysts describe the policy as purely aspirational given the current state of the sector, tribune.com.pk reported. The framework proposes sales tax on battery-electric vehicles at just 1%. EVs priced up to $50,000 will be exempt from capital value tax, withholding tax, and federal excise duty.
Financing Limits and Import Duties
Car-financing limits have increased from Rs3 million to Rs10 million under the new framework. Charging-station equipment now enjoys duty-free status to encourage infrastructure development.
Import duties will decrease annually over five years to reduce manufacturing costs and showroom prices. tribune.com.pk noted that these policy moves require International Monetary Fund approval, which might not happen because they could negatively impact the government balance sheet.
🚨 PAKISTAN AUTO POLICY 2026–31 ANNOUNCED! 🇵🇰🚗 Major shake-up for Pakistan’s auto industry! ⚡ BEV: 1% GST 🔋 REEV: 6% GST 🔌 PHEV: 9% GST 🚙 HEV: 18–25% GST ⛽ ICE: 18–25% GST 💰 Rs10m EV financing | 5-year tenure 🏭 Mandatory localisation & export targets 🛡️ 45 additional… pic.twitter.com/yXkIFzPRdR
Competitive pressure risks local manufacturing and jobs
Local manufacturers and parts makers face severe risks if new supply chains force them to compete with foreign firms. tribune.com.pk reported that this competitive pressure could endanger up to 1.5 million jobs in the Rs700 billion industry.
Cheap imports remove financial incentives for companies to pursue local production. Meanwhile, the target of 3,000 charging stations nationwide by 2030 is comically low compared to actual demand, with Senate discussions concluding that Karachi alone needs about 5,000 charging stations.
Electric Vehicle Charging Targets
- Karachi requires approximately 5,000 charging stations alone, according to Senate discussions cited by tribune.com.pk.
- The national target aims for 3,000 charging stations across the country by 2030.
- EV adoption will remain stalled unless charging infrastructure becomes easily accessible to consumers.
What are the tax exemptions and financing changes?
What are the tax exemptions for electric vehicles under the new policy?
Battery-electric vehicles face a proposed sales tax of just 1%. EVs priced up to $50,000 are exempt from capital value tax, withholding tax, and federal excise duty.
How does the policy affect car financing limits?
The government raised car-financing limits from Rs3 million to Rs10 million. Charging-station equipment also now enjoys complete duty-free status.
Why do analysts consider the Auto Policy 2026-31 aspirational?
Analysts point out that the required International Monetary Fund approval may not materialize due to potential negative impacts on the national balance sheet. The ambitious EV charging targets fall far short of real urban demands.