New Auto Policy to focus on EVs and Hybrids

With the current Automotive Development Policy (ADP) due to expire in June 2021, the Ministry of Industries and Production has almost finalized the next one. Federal Minister for Industries and Production, Hammad Azhar, briefed the National Assembly Standing Committee on Industries and Production on the upcoming auto policy as well as the outcome of the existing one.

In the meeting, chaired by Member National Assembly Sajid Hussain Turi, Hammad Azhar briefed the committee on the performance of the auto industry. He said that 20 new investors had been granted greenfield status by the government in a bid to create more competition, and that six new companies had entered the four-wheeler segment of Pakistan’s auto industry. Not only that, 4 new companies had entered the Pakistani market with buses. These new entries led to $476 million in direct investment on the ground in Pakistan.

The six new companies in the automobile sector include Kia lucky Motors Pvt Ltd, United Motors Pvt Ltd, Regal Automobile Industries Ltd, Foton JW Auto Park Pvt Ltd, Master Motors Ltd, and Hyundai Nishat Motor Pvt Ltd.

The Federal Minister called the ADP 2016-2021 a success, adding, “The existing policy will strengthen the automotive sector of Pakistan by increasing overall installed capacity of local industries up to 418,000 per annum by June 2021, that was around 280,000 at June 2020.”

Furthermore, the government has decided to incorporate a policy for electric vehicles in the next ADP 2021-2026. The new policy would cover hybrid vehicles as well as electric vehicles including those manufactured locally. On this topic, Committee member Mustafa Ahmad expressed his concerns over the government’s focus on hybrid vehicles, suggesting that the government should instead focus on battery electric vehicles and technology. He stated that the government should develop charging stations to improve the viability of EVs in the market and they should reuse batteries, citing the example of Tesla in the United States.

Asim Ayaz, General Manager of the Engineering Development Board, briefed the committee on the tariffs announced on hybrid electric vehicles under ADP 2016-2021. He stated that the new tariffs would provide a 50% tax exemption to cars under 1,800cc and 25% exemption above 1,800cc. He also informed the committee that the EV policy for 4 wheelers is almost finalized by a cabinet committee headed by the Federal Minister for Industries and Production, with an intention to remove additional customs duty, sales tax, and federal excise duty on electric vehicles once the new auto policy comes into effect from July 2021.

The policy for two and three wheelers, as well as heavy commercial vehicles has already been approved by the cabinet and has been implemented.

The committee also expressed concern at the soaring prices of automobiles in the country. Moreover, the committee recommended the Federal Board of Revenue for early release of income tax and sales tax refunds to various automakers to help with their financial situation in light of the current market situation.