An Ishaq Dar-led steering committee has reached a consensus on Pakistan’s new Auto Policy 2026–31 and will now incorporate input from the Ministry of Industries and Production.
Officials involved in the policymaking process told ProPakistani that the finalized proposal will be submitted to the ministry before being forwarded to the federal cabinet, along with the committee’s recommendations.
Sources said the steering committee has finalized the policy after reviewing concerns and recommendations raised by relevant stakeholders. The Ministry of Industries and Production will now process the proposal before it moves to the federal cabinet for approval.
This is a big breakthrough for the policy, which faced countless delays post-FY27 budget talks after disagreements with the local automobile industry over the proposed framework for electric vehicles (EVs), hybrids, taxation and localisation.
The policy is aimed at promoting EVs and hybrid vehicles, encouraging local manufacturing, increasing technology transfer and reducing Pakistan’s dependence on imported petroleum products.
The previous Auto Industry Development and Export Policy 2021-26 expired on June 30, 2026. The expiry also resulted in the withdrawal of the previous tax concession for hybrid vehicles. From July 1, the sales tax on hybrid electric vehicles (HEVs) and plug-in hybrids increased from 8.5% to 25%, contributing to higher vehicle prices.
The uncertainty over the new policy has also affected the automobile market, with some manufacturers delaying vehicle deliveries.
The government had earlier faced strong reservations from local automakers over the proposed EV-focused framework. Industry representatives had sought temporary relief for hybrid vehicles.
Dealers and industry stakeholders broadly supported the transition toward electric mobility but called for a phased approach focused on localization.
They also warned that overly generous EV incentives without a clear transition strategy could increase imports of fully built vehicles.
The final policy will now face the federal cabinet, with taxation, EV incentives, hybrid treatment, localization and the pace of the transition among the issues that have driven the prolonged policy debate.
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