Government Proposes Major Relief Measures for Auto Sector in New Auto Policy and Budget Plan

A set of proposals aimed at providing relief to the automobile sector has been introduced under the upcoming auto policy and budget framework in Pakistan.

According to details, the proposals include abolishing additional customs duties and reducing regulatory duties on the auto industry. Under the National Tariff Policy, duties are expected to be gradually reduced in phases.

The draft policy also suggests including new energy vehicles such as battery electric vehicles and other alternative fuel technologies within the regulatory framework.

For hybrid vehicles, a 5% customs duty on parts has been proposed, along with a reduction in sales tax to 9%. Similarly, customs duty on auto parts is recommended at 5%, while assembled vehicles may be subject to a 10% duty. For completely knocked-down (CKD) kits, duties between 5% and 10% are under consideration.

The proposals further recommend exemptions from certain duty conditions for electric bikes, rickshaws, and vehicles, while locally assembled electric vehicles may receive preferential protection over fully imported finished vehicles.

Additionally, the policy suggests keeping the national average tariff for locally manufactured vehicles below 6%, while gradually reducing tariffs on imported fully built petrol vehicles.

Officials also indicated that auto sector incentives will be transitioned gradually into a normal regulatory regime as part of long-term economic reforms.