ISLAMABAD: The recently announced auto policy envisages that the automotive sector would score a major shift by moving away from import-dependent assembly towards export-oriented manufacturing, greater indigenisation and internationally competitive domestic production, Adviser to the Prime Minister on Industries and Production Haroon Akhtar Khan said on Wednesday.
Speaking at a meeting of officials from the Ministry of Industries and Production, he said the Auto and Auto Parts Manufacturing Policy for the period 2026-2031 reflected the government’s vision of building an export-led, self-reliant and competitive economy, with emphasis on empowering local manufacturers, strengthening domestic auto parts production.
The adviser said the new policy introduced mandatory localisation requirements to ensure a steady growth in domestic value addition.
Haroon Akhtar said these mandatory requirements would ensure that expansion of the automotive market translated into indigenisation, investment, job creation and technological progress.
Non-compliance with minimum domestic value addition requirements will attract an additional three percentage points of customs duty on non-localised CKD imports in the subsequent financial year.
Highlighting the importance of the domestic vendor industry, the adviser said the country had approximately 2,200 auto parts manufacturers whose capacity, technological advancement and integration into international supply chains were vital to the sector’s competitiveness.
He said a dedicated “vendor upgradation and technology transfer programme”, with an allocation of Rs2.1 billion, will be implemented through the Engineering Development Board and the Small and Medium Enterprises Development Authority.
The programme will facilitate technological upgradation, access to common manufacturing facilities, skills development, international quality certification and export readiness for domestic vendors.
The auto policy also targets investment in five anchor auto parts manufacturing firms to support the development of domestic manufacturing clusters.
The adviser said export promotion was one of the defining features of the new policy, which has set cumulative export targets of around $6bn for 2026-2031.
The policy introduces a “drawback of local taxes and levies” scheme, providing eligible exporters with a five per cent support on net Free on Board (FOB) export value, along with an additional 10pc incentive on qualifying incremental exports.
The adviser said these measures would encourage manufacturers to move beyond dependence on the domestic market and develop a sustainable export-oriented business model.
Haroon Akhtar said the government was rationalising customs duties progressively over five years while ensuring that import concessions were directly linked to domestic manufacturing, localisation and export performance.
He explained that the concessional 5pc customs duty on imported battery electric vehicles (BEVs) valued up to $15,000 during the initial two years is conditional upon the establishment of domestic assembly or manufacturing facilities.
Companies seeking this concession will be required to submit a surety bond and an irrevocable bank guarantee covering the customs-duty differential.
Published in Dawn, November 12th, 2026
