New auto policy to lower vehicle prices except for luxury cars, says Haroon Akhtar

• The proposed policy sets a five-year export target of $6 billion and adds 45 vehicle safety standards.
• Fully electric vehicles would carry a 1% sales tax, with separate rates for extended-range EVs and plug-in hybrids.
• The policy is awaiting approval from the International Monetary Fund, according to Akhtar.

Prices of vehicles other than luxury cars are expected to fall under Pakistan’s proposed auto policy, Adviser to the Prime Minister on Industries and Production Haroon Akhtar Khan said on Saturday.

Speaking at a news conference alongside Federal Information Minister Attaullah Tarar, Akhtar said the policy aims to increase local production and expand exports. It sets a five-year export target of $6 billion and seeks to open overseas markets for Pakistani auto-parts manufacturers.

Under the proposal, manufacturers would receive an incentive equal to 5% of the value of their exports in the first year. Those that miss their export targets would face fines, Akhtar said. The policy also proposes additional duties on heavy vehicles fitted with commercial engines.

Akhtar said the policy introduces 45 additional vehicle safety standards and offers lower tax rates for electric vehicles. Fully electric vehicles would be subject to a 1% sales tax, compared with 6% for extended-range electric vehicles and 9% for plug-in hybrids. Machinery for EV charging stations would also carry a 1% sales tax and would be exempt from customs duty.

The proposed policy is awaiting approval from the International Monetary Fund (IMF), Akhtar said.

Tarar said the government wants to make transport more affordable and that tax concessions for electric vehicles would support that effort. He said wider use of electric motorcycles and scooters, including among women, could help reduce the country’s import bill and curb pollution.