- September 10, 2026
- Posted by: Tresmark
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Prime Minister Shehbaz Sharif has given in-principle approval to the Automotive Industry Development Policy (AIDP) 2026–31, introducing a new framework aimed at increasing exports, localisation and domestic value addition in Pakistan’s auto sector.
The policy will operate alongside the New Energy Vehicles (NEV) Policy 2025–30 and replaces the previous auto policy, which expired on June 30, 2026.
The government expects the framework to generate around $4.59 billion in vehicle and auto-parts exports and deliver $17.7 billion in foreign-exchange savings through increased local production over five years. It also targets the protection of 2.5 million jobs.
The proposed framework simplifies customs duties into four slabs of 0%, 5%, 10% and 15%, with the weighted-average import tariff expected to decline from 15.7% to 5.99% by 2030.
The policy also strengthens localisation requirements, with minimum domestic value addition targets reaching 40% for passenger cars, 45% for light commercial vehicles, 80% for tractors and 90% for motorcycles and rickshaws by FY2030–31.
Electric vehicles will receive additional support, with the government targeting a 30% EV share by 2030. The Rs100.36 billion PAVE programme will provide direct subsidies for electric two- and three-wheelers and commercial fleets, while plans include establishing 3,000 public charging stations.
Auto manufacturers will also face export-linked requirements to qualify for concessionary CKD duties. Passenger-car manufacturers will be required to increase exports to 12% of production value by FY31.
The policy further introduces restrictions on commercial imports of used vehicles, stronger safety standards based on 62 UNECE regulations, and the establishment of an Auto Parts Export Council.
Following the prime minister’s approval, the policy will move to the Economic Coordination Committee and federal Cabinet for final approval, with the IMF review process also expected to be considered.
