Five-year auto policy to remove duties on imported cars

ISLAMABAD: The federal government has decided to eliminate duties on imported vehicles as part of its upcoming five-year auto policy.

The Ministry of Industries and Production has prepared the draft policy, which will first seek approval from the International Monetary Fund (IMF) before any official announcement.

The proposed policy includes the removal of import duties on vehicles, while customs duties will increase to a maximum of 15 percent during the next five years, according to reports.

The plan also recommends stricter enforcement of safety standards and licensing requirements for vehicles.

The final draft of the policy is expected to be shared with the IMF by the end of this month. The document will undergo approval processes before presentation to the federal cabinet for formal adoption.

Pakistan will implement its new five-year auto policy on July 1, 2026, which aims to develop local vehicle manufacturing capacity and enhance parts localization while decreasing vehicle costs.

The new policy establishes a maximum customs duty rate of 15 percent for finished vehicles during the next five years, while adopting a simplified four-slab system that includes duty rates of 0 percent, 5 percent, 10 percent, and 15 percent.

During the fiscal year 2026, used vehicle imports will face a 40 percent regulatory duty, which will decrease to zero during the following fiscal year.

The Prime Minister’s Industrial Adviser, Haroon Akhtar Khan, informed reporters that the policy has reached an advanced stage and will proceed to public announcement after submission to the Prime Minister and the federal cabinet.

He stated that stakeholder consultations had been completed to establish consensus, while a balancing approach would resolve any future disagreements.