ISLAMABAD: Prime Minister Shehbaz Sharif has given in-principle approval to the long-awaited Auto Industry Development and Export Policy (AIDEP) 2026–31, but its implementation will depend on clearance from the International Monetary Fund (IMF) and approval by the federal cabinet.
The draft policy was discussed at a meeting chaired by the prime minister on Wednesday. It seeks to attract investment in the auto sector, increase local production, improve technology and help Pakistan expand vehicle exports.
Sources said the government will now share the draft with the IMF as part of its ongoing commitments with the lender. Once cleared, the policy will be taken to the Economic Coordination Committee (ECC) and then moved through the remaining approval process.
One of the main proposals is a gradual cut in duties on hybrid electric vehicles (HEVs) over the next five years.
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For hybrid cars with engine capacities from 800cc to 1,800cc and above, the proposed import duty would come down from 50% to 30%.
The draft also proposes lower duties on hybrid trucks and buses. Their duty would be reduced from 30% to 15%, while the rate for hybrid commercial vehicles would fall from 60% to 30%.
The government hopes the lower duties will encourage the use of hybrid vehicles, particularly in public transport and commercial fleets.
To make up for some of the revenue lost through the duty cuts, the government plans to impose an environmental levy on vehicles with larger engines.
Under the proposal, vehicles with engine capacities of 2,001cc to 3,000cc would face a 10% levy, while those above 3,001cc would be charged 19.5%.
Officials estimate that the levy could bring in around Rs142.79 billion during the five-year policy period.
The money is proposed to be used to support vehicle exports and local research and development in the auto sector.
