The proposed Auto Industry Development and Export Policy (AIDEP) aims to expand the auto industry in Pakistan by increasing production of cars, motorcycles, tractors etc, said Finance Minister Shaukat Tarin.

While presiding over a meeting to review the draft AIDEP 2021-2026, he said that the top most priority is to ensure consumer welfare through availability of cars at affordable rates for the middle and lower income groups.

With this end in view, the government has provided major relief to the consumers by reducing sales tax on 850cc cars along with exemption from value-added tax in the federal budget 2021-22. The Ministry of Industries and Production confirmed that prices of vehicles have been reduced commensurate with reduction in taxes and the industry has widely advertised for the information of the general public. The policy would encourage exports of vehicles and automobile parts.

The industries ministry secretary briefed the participants about the salient features of the draft AIDEP 2021-26. The vision of the policy shall be to make Pakistan a hub for competitive manufacturing of auto parts and vehicles for local markets as well as for exports. The key focus is to strengthen the competition within locally manufactured vehicles in order to provide high quality vehicles at affordable prices to the consumers in the country. It also includes increase in export of automobile parts and vehicles to earn a valuable foreign exchange.

The finance minister also underscored the importance of electric vehicles (EVs) and affirmed to provide incentives for developing the electric vehicle market in Pakistan including EV charging infrastructure. “The promotion of EVs will reduce dependence on oil import bill and promote environment friendly options.”

Tarin also stressed to come up with innovative products for provision of car financing at reduced mark-up to consumers so that everyone can afford a car at flexible terms and conditions.

While speaking on the occasion, Minister for Industries and Production Khusro Bakhtiar said that new entrants may be encouraged in the auto sector particularly for EVs. “This in turn, would encourage auto companies to invest in related infrastructure in Pakistan.”

Meanwhile, Adviser to the PM on Commerce Abdul Razak Dawood stated that the existing tariff structure needs to be rationalised (in a phased manner) to promote the auto industry in Pakistan, keeping in view, the objective of localisation ie to encourage local auto industry to come-up with high quality vehicles within affordable range.

Published in The Express Tribune, July 30th, 2021.

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