The federal government on Saturday introduced the new auto policy, with a special focus on cheaper vehicles and electric vehicles (EVs).
Information Minister Attaullah Tarar and Adviser to the Prime Minister for Industries and Production Haroon Akhtar Khan announced the policy while addressing a press conference in Islamabad.
Speaking to the media, Akhtar said that a lot of work was done in drafting the policy, adding that Prime Minister Shehbaz Sharif had invested a lot of time in this regard.
He said that the policy rested on six basic pillars: cheaper vehicles, especially for the middle class and lower middle class; encouraging exports; localisation; vehicle safety; promotion of EVs; and transparency.
He said that the premier had introduced a tariff policy, the purpose of which was to lower the cost of production and the import bill of raw materials.
“You will see that prices of cars will come down … the manufacturing cost of automakers will come down; these were the prime minister’s specific instructions. The prices of all vehicles, except luxury vehicles, will come down,” Akhtar said.
He explained that prices would come down gradually as the duties for completely built units (CBUs), assembly plants and components would be reduced each year, eventually leading to competitive tariffs after five years.
The PM’s industries aide said localisation had been made mandatory, with targets to be given to manufacturers. He added that a “rewards and penalty” system will also be introduced to boost exports, under which exporters will get 5 per cent Duty Drawback on Local Taxes and Levies (DLTL), with an additional 10pc as exports increase.
“But if you do not achieve the targets, a penalty will be imposed as well,” he warned, adding that car manufacturers will not get DLTL unless they achieve the entire export target as well as their local manufacturing target.
Akhtar stressed that the government had made the export rebate conditional on the local manufacturing target, noting that PM Shehbaz wanted more jobs to be created in the country through increased plants.
Speaking on vehicle safety, Akhtar said the policy includes 45 additional safety standards in line with the United Nations’ WP.29 code. He contended, “When our vehicles will go through these safety codes, they will be considered the world’s safest vehicles — both manufactured and used.”
The production adviser further said that the government’s aim of transitioning 30pc of all new vehicles in Pakistan to electric power by 2030 was “about to happen sooner than that”.
Explaining a “major benefit” for EVs, he said three categories of sales taxes have been planned — 1pc on purely electric vehicles, 6pc on range-extended EVs and 9pc on hybrid EVs. However, he added this was subject to approval by the International Monetary Fund (IMF).
Akhtar also said no capital value tax (CVT), withholding tax or federal excise duty (FED) would be applicable on EVs that are priced up to $50,000. EVs above this will be considered “luxury” items and will be subject to normal taxation.
Furthermore, the State Bank of Pakistan’s car financing plan, which offers up to Rs3 million for ordinary cars, will be expanded up to Rs10m for all EVs, along with the tenure extended from three years to five years.
In a post on X, Tarar said the new policy was developed after consultations with all stakeholders, analysis of technical data, and a review of various global models.
“Innovation, value addition, and localisation will be promoted in the local industry to create employment opportunities and enable vehicle exports,” he said.
The minister highlighted that encouraging EVs will reduce carbon emissions and the oil import bill, adding that incentives have also been provided for establishing charging stations.
He termed the initiative a “significant step toward providing Pakistani citizens with affordable, high-quality, and environmentally friendly transportation”.
More to follow
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