Islamabad: Pakistan’s automotive sector is set to undergo a significant transformation as the government unveils the Autos and Auto Parts Manufacturing Policy 2026-2031. Adviser to the Prime Minister on Industries and Production, Haroon Akhtar Khan, announced that the policy aims to shift the industry from import-dependent assembly to export-oriented manufacturing, with a projected export target of $6 billion over the policy period.
According to Press Information Department, the policy aligns with Prime Minister Shehbaz Sharif’s vision of an export-led, self-reliant economy. It mandates localisation, promotes domestic manufacturing, and targets a $17.7 billion saving in foreign exchange through increased local production. The policy introduces binding localisation requirements, with non-compliance leading to additional customs duties on non-localised imports.
The initiative will provide dedicated support to approximately 2,200 local auto parts manufacturers through a Rs 2.1 billion Vendor Upgradation Programme. This programme, facilitated by the Engineering Development Board and the Small and Medium Enterprises Development Authority, aims to enhance technological capabilities and integrate local vendors into international supply chains.
The policy also sets a substantial export target, with 55 percent expected from the auto parts industry, highlighting the government’s strategic focus on developing competitive domestic suppliers. Incentives for exporters include a Drawback of Local Taxes and Levies scheme, offering a 5 percent support on net Free on Board export value and an additional 10 percent on qualifying incremental exports.
Import concessions are directly linked to local manufacturing and export performance, with reduced customs duties for battery electric vehicles conditional on establishing domestic assembly facilities. The policy anticipates that increased local manufacturing and export growth will alleviate pressure on Pakistan’s external account and foster industrial self-reliance.
Khan emphasized that the policy aims to utilize idle industrial capacity, improve production efficiency, and create new investment and employment opportunities. He concluded that the policy is designed to build a manufacturing-led, export-oriented framework that strengthens Pakistan’s industrial base and positions the country as a competitive player in global automotive supply chains.