Prime Minister Shehbaz Sharif has given in-principle approval to Pakistan’s new Auto Policy 2026–31, sources said on Wednesday. The government will now send the policy to the International Monetary Fund (IMF) for review and approval.
Once the IMF clears the framework, officials will present it to the Economic Coordination Committee (ECC). The government will then seek federal cabinet approval before presenting the policy in Parliament for final legislation through a Finance Bill.
New policy targets auto sector growth
The approval marks a major development after repeated delays following the FY27 budget discussions. Disagreements with the local automobile industry over electric vehicles, hybrids, taxation and localization slowed progress on the proposed framework.
Meanwhile, the government aims to use the new policy to strengthen Pakistan’s automotive sector. Officials expect the framework to encourage investment, expand local manufacturing and improve technology transfer.
EVs and hybrids gain greater focus
The policy places strong emphasis on electric vehicles and hybrid technology as Pakistan seeks to reduce its dependence on imported petroleum products. Furthermore, officials expect greater adoption of cleaner vehicles to support long-term energy and transport goals.
The framework also seeks to increase localization across the automotive industry. By encouraging domestic production and technology transfer, the government hopes to strengthen local supply chains and create new opportunities for manufacturers.
However, the policy still faces several approval stages before implementation. After IMF clearance, the ECC and federal cabinet must approve the framework, followed by parliamentary consideration and enactment through the Finance Bill.
The government expects the policy to provide a clearer direction for Pakistan’s automotive industry from 2026 to 2031.
