The proposed automotive policy prioritises vehicle localisation, stricter safety standards, electric vehicle adoption and consumer protection, with the final draft set to go before the Federal Cabinet.
Islamabad, November 7, 2026: Prime Minister Shehbaz Sharif has approved the final draft of Pakistan’s new Automotive Industry Policy, paving the way for its submission to the Federal Cabinet for consideration.
Adviser to the Prime Minister on Industries and Production Haroon Akhtar Khan announced the development on Saturday at a press conference alongside Federal Minister for Information and Broadcasting Attaullah Tarar.
Khan said the proposed policy aims to address structural weaknesses in Pakistan’s automotive sector by promoting localisation, improving vehicle safety standards, encouraging electric vehicle (EV) adoption and transforming the industry into a competitive, export-oriented manufacturing base.
He said Pakistan had introduced several automotive policies over the past decade but had failed to achieve the desired growth in automobile exports. The government is now pursuing a focused strategy to translate policy commitments into measurable industrial and economic outcomes.
Localisation and domestic manufacturing
The Adviser said localisation was among Prime Minister Shehbaz Sharif’s key priorities, as strengthening domestic manufacturing would create employment, support industrial development and reduce dependence on imports.
He stressed that the government did not want Pakistan’s automotive industry to remain dependent on completely built units (CBUs) or limited to assembling completely knocked-down (CKD) kits.
Instead, manufacturers would be encouraged to increase local content, develop domestic vendor industries and strengthen the country’s automotive supply chain.
According to Khan, expanding local manufacturing would help retain greater economic value within Pakistan while improving the industry’s long-term competitiveness.
Stricter vehicle safety standards
Vehicle safety is another important component of the proposed auto policy.
Khan expressed concern over inadequate safety standards, particularly in imported used vehicles, referring to road accidents involving defective brakes, tyre failures and missing or non-functional safety features, including seat belts.
He said the government intended to strengthen consumer protection by ensuring that vehicles available in the Pakistani market meet appropriate safety requirements.
Government pushes electric vehicle adoption
The proposed policy also places considerable emphasis on promoting electric vehicles to reduce Pakistan’s dependence on imported petroleum products.
Khan explained that fluctuations in international oil prices increase the country’s import bill, put pressure on the current account and contribute to domestic inflation.
Accelerating EV adoption could help reduce petroleum imports while supporting cleaner and more sustainable transportation.
He recalled that Prime Minister Shehbaz Sharif had launched the National Electric Vehicle Policy last year, adding that the government would also share updates on its implementation.
Advance payment capped at 20%
Consumer protection and transparency have also been incorporated into the proposed framework.
Khan said the Prime Minister had directed that manufacturers must not demand advance payments exceeding 20 per cent of a vehicle’s price at the time of booking.
The measure is intended to protect buyers from excessive advance payment demands and address market practices associated with additional charges commonly known as on-money.
The Adviser also highlighted the inclusion of third-party audits to strengthen transparency, accountability and public confidence in government initiatives.
National Tariff Policy to support manufacturers
Khan said the National Tariff Policy would complement the automotive framework by reducing production costs through more affordable imported raw materials and intermediate goods.
Lower input costs would enable domestic manufacturers to produce vehicles and other finished goods at competitive prices, benefiting local consumers and improving export potential.
He reiterated that the government’s broader objective was to transform Pakistan’s automotive sector from an import-dependent, assembly-oriented industry into a locally integrated and export-driven manufacturing base.
Following the Prime Minister’s approval, the final draft will be submitted to the Federal Cabinet for consideration before proceeding through the remaining approval stages and eventual implementation.