Pakistan Auto Policy 2026-31 Sets $6bn Export Target

Pakistan’s proposed Auto Policy 2026-31 has set a five-year goal of $6 billion in cumulative automotive exports, but buyers and car companies should not treat it as a finished rulebook yet. The draft has been approved at the Prime Minister’s level after IMF clearance, but it still needs federal cabinet approval before any measure becomes binding.

For ordinary buyers, the biggest questions are simple: will car prices change, will booking payments be capped, and will bigger-engine vehicles face a new levy? The draft policy touches all three, but nothing in it is active until the government issues the final notification.

What the draft policy wants to change

The plan includes a proposed Automotive Development Levy (ADL) on internal combustion engine vehicles. In the draft, vehicles with engines of 1,000cc or below are set to be exempt.

The government says revenue from the ADL would help fund incentives for electric vehicles and auto exports. Officials have also described the setup as revenue-neutral, meaning the state wants the levy to support other incentives rather than simply add to the tax burden.

Another major part of the draft is export support. Manufacturers could get a 5% Duty Drawback on Local Taxes and Levies, plus an additional 10% incentive on incremental annual export growth. But those benefits would not come free. They would be tied to localization targets and export performance, and companies that miss the required marks could face penalties.

That is important for Pakistan’s auto industry because it still leans heavily on assembly and imported CKD kits. The policy is trying to push makers toward more local parts, more domestic value addition, and less dependence on imports.

For background on where this policy has been heading, see DrivePK’s earlier coverage on the policy being delayed after IMF concerns and the wider uncertainty around taxes and hybrid vehicles.

What it could mean for car bookings

The draft also proposes a consumer rule that would matter right away if approved: automakers would not be allowed to demand more than 20% of the vehicle price as an advance at booking.

For a car priced at Rs 5 million, that would mean a maximum advance of Rs 1 million. The aim is to reduce large upfront demands and address complaints about booking practices and “on-money” pressure.

Still, readers should be careful. This cap is only a proposal for now. Existing bookings, dealer terms, and delivery rules do not automatically change unless the final policy and implementation notices say so.

Safety, localization and the bigger picture

The draft also gives space to vehicle safety, with mention of brakes, tires, seatbelts and other safety equipment in both locally made and imported vehicles. That could improve standards over time, but the policy does not yet spell out the exact rules, inspection method or enforcement date.

For buyers, the practical advice is simple:

• If you need a car soon, get the booking terms in writing.

• If you are considering a vehicle above 1,000cc, wait for the final ADL rate and launch date before estimating your total cost.

• If you are looking at an EV, hold off on assuming any incentive until the cabinet approves the policy and the rules are published.

The headline target is big, but the policy is still a draft. Until the cabinet acts, it remains a proposal, not a confirmed price or booking rule for Pakistan’s car market.

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