Pakistan’s new auto policy is expected to be approved in the coming days, with implementation likely to begin from July 1, 2026.
According to official documents, the proposed five-year policy includes an environmental levy on large vehicles to support exports, research and development, and local manufacturing of cleaner vehicles.
Under the proposed auto policy, a 10% environmental levy will be imposed on vehicles between 2,001cc and 3,000cc.
For luxury and larger vehicles of 3,001cc and above, the levy will be 19.5%.
The revenue generated from this levy will be allocated for export promotion, research and development, and investment in the local auto industry.
Rs142.79bn revenue expected in 5 years
According to the document, the environmental levy is expected to generate Rs142.79 billion over five years. The estimated revenue for 2026-27 is Rs25.84 billion.
In 2027-28, the levy is expected to generate Rs27.13 billion, followed by Rs28.49 billion in 2028-29. For 2029-30, the estimated revenue has been set at Rs29.91 billion.
Policy to promote eco-friendly vehicles
The proposed auto policy identifies battery electric vehicles, plug-in hybrid vehicles and range-extended electric vehicles as key pillars of future development.
The policy also includes measures to promote local manufacturing of environmentally friendly vehicles through revenue generated over the next five years.
Easy financing and loan facilities for the purchase of electric vehicles are also part of the proposed framework.
Battery swapping infrastructure planned
The policy proposes the introduction of battery services and battery-swapping infrastructure to support electric vehicle adoption. Import concessions for electric vehicles will be linked to localization and local production.
According to the document, hybrid vehicles will not be included in the category of new energy vehicles.
The proposed new auto policy is likely to be approved soon.
Once approved, it will come into effect from July 1, 2026, and remain focused on cleaner mobility, local production, investment, research and export growth over the next five years.
