Govt plans major overhaul of Auto Sector

ISLAMABAD: The government has decided to make major changes in the auto sector and preparations have been started to phase out additional customs duties and regulatory duties imposed on imported vehicles.

According to the details, the federal government is going to implement a new auto policy from July 1, 2026. Consultations on an initial draft have also been started with the International Monetary Fund in this regard. The aim of this policy is to improve the tariff system, make the import process transparent and bring the standards of the local auto industry in line with global standards.

Under the government plan, additional duties imposed on imported vehicles will be gradually reduced. They will be reduced by 10 percent every year from the financial year 2027 and these additional duties will be completely abolished in the next four years. Along with this, customs duties will also be reduced in phases by 2030.

Changes are also being made regarding the import of used vehicles in the new policy. It is proposed to allow the import of vehicles up to 7 years old after fiscal year 2027, but it will be mandatory to meet strict safety and environmental standards.

A special safety and environmental certificate is being made mandatory for vehicles older than five years so that only safe and quality vehicles can ply on the roads.

In addition, it has been decided to implement world-class safety standards in locally manufactured vehicles. For this purpose, a new law will be passed by the parliament so that local production can be brought in line with international standards.

According to the Ministry of Industries and Production, the draft of the new auto policy will be completed soon and further consultations will be held with the IMF. Later, it will be presented to the federal cabinet for approval.