ISLAMABAD: In a major policy shift aimed at transforming the country’s automotive sector, Pakistan has introduced the Auto and Auto Parts Manufacturing Policy (2026–2031). Unveiled by the Adviser to the Prime Minister on Industries and Production, Haroon Akhtar Khan, the five-year framework moves away from traditional vehicle assembly toward localized manufacturing and export-driven growth.
Pakistan Unveils 2026–2031 Auto Policy to Bolster Domestic Industrial Base
The comprehensive policy targets $6 billion in cumulative exports by 2031 comprising $3.29 billion from auto parts manufacturers and $2.72 billion from vehicle assemblers while projecting $17.7 billion in foreign exchange savings by curbing reliance on imported components.
To bolster the domestic industrial base, the government is launching a Rs 2.1 billion Vendor Upgradation and Technology Transfer Program, implemented by the Engineering Development Board and SMEDA, to equip local vendors with advanced machinery and international certifications. Furthermore, the framework introduces stringent localization benchmarks, warning of a 3% increase in customs duties on non-compliant Completely Knocked Down (CKD) imports.
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The policy also extends targeted incentives for the electric vehicle sector, offering a concessional 5% customs duty on imported Battery Electric Vehicles valued up to $15,000 for the first two years, tied to mandatory local assembly timelines. Additionally, exporters will benefit from the Drawback of Local Taxes and Levies scheme, providing a 5% support subsidy on FOB export values to firmly integrate Pakistani manufacturers into global automotive supply chains.
