Carmakers push government to withdraw EV policy

The government has withdrawn its proposed Auto Policy 2026-31 and restarted the drafting process after local automobile manufacturers raised concerns over incentives for electric vehicles (EVs), according to industry sources.

 

The original policy, prepared by the Ministry of Industries and Production, aimed to accelerate the adoption of EVs and reduce Pakistan's dependence on imported petroleum products. However, domestic automakers argued that the proposed framework offered preferential treatment to EVs without providing a clear transition plan for conventional vehicle and auto parts manufacturers.

 

Following representations from the industry, Prime Minister Shehbaz Sharif directed the formation of a new committee, led by Deputy Prime Minister Ishaq Dar, to prepare a revised policy.

 

The delay has also resulted in the expiry of tax concessions under the Auto Industry Development and Export Policy 2021-26. From July 1, 2026, the general sales tax (GST) on hybrid and plug-in hybrid vehicles reverted to 25% from the concessional rate of 8.5%, prompting price increases by several automakers and disrupting vehicle deliveries.

 

Industry representatives have urged the government to adopt a phased transition to electric mobility, including moderate tax rates for hybrid vehicles, greater localisation of EV components, technology transfer and support for existing parts manufacturers to adapt to the evolving automotive landscape.