Islamabad: Prime Minister Shahbaz Sharif has approved a new auto policy, under which a target has been set to increase vehicle exports to $6 billion in 5 years.
The Prime Minister has approved the auto policy 31-2026. The new auto policy proposes a lower tariff on small electric vehicles worth less than $15,000. It is proposed to increase the financing limit for electric vehicles from $3 million to $10 million and the term from 3 to 5 years. An automotive development levy will be imposed on vehicles larger than 1,000 cc.
The target is to increase exports of auto parts manufacturers to $1.2 billion by 31-2030. Mandatory export targets will be set for vehicle manufacturing companies. It is proposed to give 5 percent compensation to companies for increasing exports.
An additional 10 percent incentive will be imposed on additional exports compared to the previous year and penalties will be imposed on companies that do not meet export targets. If the export targets are not met for two consecutive years, the manufacturing certificate will be cancelled and the incentives of the companies that do not meet the export target continuously will be withdrawn.
Under the policy, it is estimated that more than Rs 232 billion will be collected as automotive development levy in 5 years. Export incentives and industrial development programs will be run from the automotive development levy.
The policy includes proposals to allocate funds for technology upgradation of auto parts manufacturers, establish the Pakistan Automotive Testing Institute, and fund research, certification and third-party audits in the auto sector.
The new auto policy proposes to implement global safety regulations on local and imported vehicles. Buyer protection clauses will be included in the contracts of auto companies. It is proposed to conduct a third-party audit of the auto sector twice a year. It is proposed to set new targets for training skilled manpower in the auto sector.
The Auto Policy aims to enact a law on Automotive Development Levy by December 2026.
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