Auto Policy Gridlock Continues as Ministerial Committee Fails to Agree on 2026-31 Tariff Reductions.

The Pakistani government has not moved the new auto policy this week, as a ministerial committee could not reach a decision on the draft for the 2026‑31 period. The committee, chaired by Power Minister Sardar Awais Leghari, held several sessions, the latest on Thursday, and officials say it failed to agree on the proposed tariff changes. The auto ministry released a revised list of tariff proposals that shows some flexibility compared with its earlier stance, but the new rates still hover up to 300 % above the national tariff levels. By 2030 the national maximum customs duty for cars is 15 %. The ministry’s proposal raises it to 60 % for vehicles with engines of 1501 to 1800 cc – a 300 % increase over the national rate but 34 % lower than current tariffs. Leghari explained to *The Express Tribune* that tariffs are only one element of the policy, which also aims to standardise vehicles, secure contractual obligations, and reduce consumer prices. The ministry argues that removing tariff walls entirely without sustainable taxation, energy costs, a flexible exchange rate and stable interest rates would hurt local manufacturers and make Pakistan a pure trading hub. It has suggested a 34 % tariff drop over five years for cars up to 1800 cc, calling it a significant reduction. For cars with engines between 1001 and 1500 cc, the ministry recommends minimum tariffs of 45 % for 2030 – 200 % more than the national rate and 25 % below existing rates, citing a need for 40‑45 % protection to stop finished‑vehicle imports. The ministry cautions that markets with large volumes could dump finished vehicles into Pakistan, undermining local production. It also wants to lower the customs duty on imported parts under SRO 655 from 20 % to 5 % to support input substitution, claiming it will foster diversification, investment, employment and technology transfer. Higher costs for internal‑combustion engines are part of a strategy to shift consumer preference to new‑energy vehicles; for cars above 1801 cc, the ministry proposes a 75 % tariff – a 266 % rise over the national rate but 52 % lower than current levels – and expects a 52 % drop over five years. Additionally, the ministry proposes up to 60 % federal excise duty on these cars so that part of the revenue can fund export incentives, anchor parts manufacturers and automobile testing facilities. Cars with engines between 801 and 1000 cc would face a 40 % minimum tariff – 166 % above the national rate yet 45 % below existing rates – plus a 9.5 % excise duty, whereas the national policy calls for excise duty abolition. There are differing views on vehicle exports and the penalty regime for companies that fail to export a stipulated number of cars; the commerce ministry has offered a one‑year relaxation on tariff implementation but remains committed to the ultimate goal of a 15 % rate. During Thursday’s meeting, participants discussed how increased local production under the new policy could save foreign‑exchange reserves. Leghari said the committee wants a rapid conclusion but acknowledged that gathering the necessary data sets is a time‑consuming step. Comments on the article are moderated and will only be posted if they remain on topic and non‑abusive.