The Auto Policy Gap: A Lapsed Concession, a Reversed Draft, and a Replacement Still in Negotiation
Traces Pakistan's auto policy from the lapse of the 2021-26 framework on 30 June 2026, through a hybrid sales-tax snapback that added more than Rs1.3 million to some prices and a first EV-weighted draft withdrawn after industry appealed to the Prime Minister, to a redraft still stuck on import tariffs. Reads it alongside the battery, solar and electronics policies moving through the same negotiated process.
Overview
The Auto Industry Development and Export Policy 2021-26 reached its end date on 30 June 2026 with no replacement issued. The concessionary general sales tax on hybrid vehicles lapsed the same day and was not restored, and Toyota and Honda assemblers raised hybrid prices by between Rs1.31 million and Rs1.37 million on the affected models. A first replacement draft was withdrawn in late July after manufacturers took their objections above the drafting ministry to the Prime Minister, and a redraft is now with the Ministry of Industries and Production, reported to be in its final stages.
This commentary looks at what the gap has cost and at how the replacement is being produced. It reads the episode as showing two working features of industrial policy in Pakistan: a scheduled expiry date, known five years in advance, arriving with no successor in place, and a near-final draft reversed once the affected industry appealed over the officials who wrote it. Both are visible again across the other sector policies, for batteries, solar panels and electronics, that are moving through the same negotiated process.
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