Pakistan and the International Monetary Fund did not settle the Auto Policy 2026 to 2031 in the opening days of October 2026. Accounts of the review say the Fund objected to parts of the draft from the Ministry of Industries and Production and asked for more data before the policy can go to the federal cabinet.
The paper is the Auto and Auto Parts Manufacturing Policy 2026 to 2031, meant to follow the Auto Industry Development and Export Policy that has covered the sector through 2026. Officials had expected a finished draft inside the current economic review. Instead, the government is expected to brief the Economic Coordination Committee and the federal cabinet, then rewrite sections after further talks with local manufacturers, importers and the IMF.
The Fund has not published a clause by clause list of what it rejected. What several accounts of the Islamabad meetings agree on is narrower. There is no full agreement, more information has been requested, and cabinet approval is not the automatic next step.
Where this sits in the wider review
The auto draft is one file inside a larger programme review, not a separate negotiation. Pakistan is in the fourth review of a 37 month Extended Fund Facility worth about 7 billion dollars, approved in September 2024. A review of the Resilience and Sustainability Facility, worth about 1.4 billion dollars, is moving alongside it.
People familiar with the timetable have said a completed pair of reviews could release about 1 billion dollars under the Extended Fund Facility and about 200 million dollars under the Resilience and Sustainability Facility, or roughly 1.2 billion dollars together. That is programme financing, not a sum on a car invoice.
Finance Minister Muhammad Aurangzeb opened the review meetings on 29 September 2026. The mission has been reported as being led by Iva Petrova. By 2 October, accounts of the talks described the auto policy discussion as inconclusive.
What the draft is trying to do
The ministry has framed the policy around lower vehicle prices, better build quality, higher exports and faster adoption of electric vehicles. Accounts of the text describe customs duties on conventional vehicles falling by as much as 80 percent over five years, with taxes easing from 2026 under the national tariff framework.
Equal treatment is proposed for battery electric vehicles, plug in hybrids and range extended electric vehicles. Reported incentives include a 1 percent sales tax idea for electric vehicles, relief from federal excise duty, capital value tax and withholding tax, and a 1 percent customs duty on charging station equipment. The same accounts describe an electric vehicle financing ceiling of Rs 10 million, with the repayment window moving from three years to five years.
None of that is the tax a dealer can charge this week. A draft incentive does not amend the Sales Tax Act by itself. The guide to what is law now and what is still a draft separates the two.
On hybrids, the live rule is already in force and should not be confused with the new policy. From 13 September 2026, S.R.O. 1525(I)/2026 put qualifying locally manufactured hybrid electric vehicles with engines up to 2,000 cc back on the standard 18 percent sales tax framework. Imported hybrids, engines above 2,000 cc, plug in models and range extended models still have to be checked one by one. Specified electric vehicle relief already written into tax law runs through 30 June 2027, and it depends on category and how the vehicle is built. A line that every electric car will pay 1 percent sales tax overstates both the draft and the law now in force.
Export targets and consumer clauses
Export rules are the other sensitive chapter, and the percentages in circulation do not all match. Earlier descriptions talked about passenger car exports around 12 percent of production value by the early 2030s. Accounts of the draft taken to the Fund in early October instead describe a staircase for car makers, from 4 percent in the 2026 to 2027 year to 20 percent by 2030 to 2031, with auto parts targets rising from 5 percent to 15 percent.
Those figures are not a notified factory obligation. The explainer on export conditions in the same draft sets out why the final wording matters, including how a target is calculated and whether a miss changes the duty on imported kits. Some descriptions also attach a large foreign exchange saving and a high dollar export goal to the document. Those extra figures have not been confirmed in a published ministry statement from this review.
Two consumer ideas in the October accounts would matter in the showroom if they survive redrafting. Manufacturers would have to state a delivery date at booking, and the company rather than the buyer would carry the risk if the price rose afterwards. That is a proposal only. It is not printed on booking forms today, and it does not override a contract a buyer has already signed.
What buyers should do while the draft sits
Do not price a car on the assumption that duties will fall by 80 percent, that every bank must lend Rs 10 million for an electric vehicle, or that a booking made this month is protected by the draft consumer clause. Dealers have to invoice the taxes that the Finance Act and current FBR notifications already impose.
The practical comparison is what is actually for sale. The new car price directory lists models and variants now in the market. Fuel is a separate monthly cost, and the current petrol and diesel rates move on their own schedule. An unfinished auto policy does not reset either one. How ready the local market is for that shift is also separate from whether this draft clears the Fund.
What has to happen before the policy is real
Officials have described the next steps as a briefing for the Economic Coordination Committee and the federal cabinet, then another round with assemblers, importers and the IMF. Only after that would a revised draft return for approval. Even a cabinet decision can still need a change to tax law or a fresh FBR notification before a showroom price moves.
Until a notified Auto and Auto Parts Manufacturing Policy 2026 to 2031 exists, the status at the start of October 2026 is plain. The talks stalled. The Fund wants more data. The objections have not been published clause by clause. The price relief, export rules and electric vehicle incentives in the draft remain proposals.