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The next automobile policy will test the ability of policymakers to reconcile competing commercial interests while keeping the country’s broader economic, industrial and environmental objectives in view. In more than one way, the new policy will be the most consequential industrial policy document Pakistan has produced in years.
Every major stakeholder is lobbying aggressively for protecting their commercial interests through a policy that was supposed to be announced before the expiry of the previous one on June 30. Legacy assemblers want protection for their existing internal combustion engine (ICE) portfolios. Hybrid and plug-in hybrid manufacturers seek extension of tax incentives that expired with the 2021-26 policy. The electric vehicle (EV) manufacturers want a policy that accelerates adoption of electric mobility in accordance with the government policy that commits to boost EV share in new sales to 30 per cent of the total by 2030, 50pc by 2040 and 100pc of new sales by 2050, with a net-zero transport-fleet ambition by 2060.
Auto parts manufacturers are demanding stronger localisation requirements from new Chinese hybrid and EV brands, and an immediate reversal of the tariff liberalisation introduced in the current year’s budget. Their argument is is that reduced protection for the local auto industry — assemblers and parts manufacturers alike — significantly slashes the incentive for localisation, encourages the import of completely built units (CBUs), and drains foreign exchange. It merits serious consideration.
