Pakistan's new Auto Policy 2026 to 2031 has hit another wall. Reports on 24 October 2026 say the Commerce Ministry and the Ministry of Industries and Production still cannot agree on tariffs, and the ministerial committee handling the policy will now ask Prime Minister Shehbaz Sharif to settle the matter. The Industries Ministry wants the Tariff Policy Board to meet urgently and fix an interim duty regime for car kits and parts until the dispute is resolved.
The Prime Minister gave the draft in principle approval on 20 October. The deadlock is over the detail that decides what you pay for a car, the customs duty on kits, raw materials and components that local assemblers import.
The short version
- The ministerial committee led by Power Minister Awais Leghari will seek the Prime Minister's guidance
- Commerce wants duties to follow the National Tariff Policy, which caps tariffs at 15 percent by 2030
- Industries wants more protection for local assembly and parts making
- One official said the government has to choose between the tariff policy and the auto policy because both cannot run at once
- Industries says duties on kits, raw materials, subcomponents and assemblies fall under the Tariff Policy Board and wants an interim decision
- Work has slowed because key officials have been abroad, including the Commerce Secretary, who is in Washington for trade talks with the United States
What the two ministries disagree on
| Issue | Commerce Ministry | Ministry of Industries and Production |
|---|---|---|
| Which policy decides duties | National Tariff Policy | Auto Policy, with Tariff Policy Board rulings |
| End point for tariffs | 15 percent maximum by 2030 | Higher protection for local assembly |
| Kits and parts | Lower duties across the board | Interim duty mechanism set by the Tariff Policy Board |
The National Tariff Policy is the government's plan to cut import duties across the economy. The Finance Act 2026 to 2027 has already begun lowering duties on completely built up cars under it. The previous auto policy, AIDEP 2021 to 2026, has expired, so there is no fresh auto policy in force to set the duty structure for local assembly.
Earlier this year the Industries Ministry proposed much higher end point duties than the tariff policy allows, including 60 percent on cars from 1,501cc to 1,800cc, 45 percent on cars from 1,001cc to 1,500cc and 75 percent above 1,801cc. It argued that local assembly needs about 40 to 45 percent protection to survive. Commerce has pushed back because those levels would break the 15 percent cap.
Why an interim Tariff Policy Board decision matters
Without a ruling, assemblers and vendors do not know what duty they will pay on kits and parts in the months ahead. That makes it hard to plan imports, set prices and commit to new models.
The Industries Ministry says the Tariff Policy Board has the authority to set duties on completely knocked down kits, raw materials, subcomponents and assemblies. It wants the board to meet as soon as possible and approve a temporary mechanism. A board meeting on the same issue was postponed in July, so the question has now been open for more than three months.
Who is waiting on the decision
- Carmakers. Suzuki, Toyota, Honda and other assemblers need clarity on kit duties before they plan prices and new models for 2027
- New electric and hybrid brands. BYD, Geely, Sazgar and Nishat are expanding local assembly and need to know the tariff on battery and motor kits
- Parts makers. PAAPAM has written to the Prime Minister warning that the draft risks around 1.5 million jobs, adding to its earlier warning on the 15 percent parts tariff
- The IMF. The draft has to be shared with the IMF, which has already questioned the tax breaks, as explained in our report on IMF objections to the auto policy
The electric vehicle angle
The New Energy Vehicle Policy 2025 to 2030 targets a 30 percent share of new car sales for electric vehicles by 2030. Officials say that would save around 2 billion litres of fuel a year and cut carbon emissions by about 4.5 million tonnes.
Two gaps remain. One official involved in the talks says all new energy vehicles should carry a single tariff, but no such tariff has been agreed. The rules for EV charging stations, drafted in 2024, are also still pending between the Engineering Development Board and the National Energy Efficiency and Conservation Authority. For the tax rules that already apply to hybrids and EVs, see our guide to what is law now and what is still draft.
What it means for car buyers
For now, car prices do not change because of this dispute. Current duties and taxes stay in place until a new structure is notified.
The outcome will decide how much prices can fall later. If the Prime Minister sides with Commerce, duties move faster toward 15 percent and imported and locally assembled cars should get cheaper over time. If Industries gets more protection, price cuts on locally assembled petrol cars are likely to be smaller. Our model by model price estimates show what the draft projects if it passes as written, and our explainer on the development levy covers the new charge on petrol and diesel cars.
If you plan to buy soon, compare current prices on our new cars page rather than waiting on a date that keeps moving.
What happens next
- The ministerial committee will brief the Prime Minister and ask him to choose a tariff path
- The Industries Ministry wants a Tariff Policy Board meeting to approve interim duties
- The draft will be sent to the IMF, then to the Economic Coordination Committee and federal cabinet
- Export rules in the draft may face their own scrutiny, as covered in our report on how they could reopen WTO tensions with Japan