Islamabad (Commerce Desk) — Prime Minister Shehbaz Sharif has approved the Auto Policy 2026.
According to sources, the new auto policy will be formally announced next week after approval from the IMF. The committee established regarding the auto parts policy had already approved its recommendations.
According to the document, it has been proposed to establish links with global value chains to increase auto parts exports and include five major anchor manufacturing companies in the export sector.
The recommendations include establishing clusters of small and medium-sized enterprises in the auto sector and abolishing duties on the import of auto parts intended for export.
Proposals have also been put forward to establish an Auto Parts Export Council, make local value addition mandatory, allow contract manufacturing in the auto industry and digitize the approval process of the Engineering Development Board.
The policy proposes providing uniform incentives for electric vehicles, imposing only 1% sales tax on new energy vehicles, and abolishing federal excise duty, capital value tax and withholding tax.
The document also includes a proposal to increase the loan limit for purchasing electric vehicles to Rs10 million.