Pakistan is expected to continue its existing auto policy for another year after discussions between the IMF and the Tariff Policy Board failed to reach an agreement on a new automotive policy. The decision comes after negotiations remained inconclusive, delaying the introduction of a revised framework for the country’s automobile sector.
According to sources in the Ministry of Finance, the government has agreed to extend the previous auto policy temporarily. Officials said more discussions with the IMF will take place before a final version of the new policy is approved.
The previous automobile policy expired on June 30, 2026. However, the government has not yet introduced a replacement because negotiations over the revised policy are still ongoing.
Sources said Pakistan has also been unable to fully implement several parts of the previous automobile policy. As a result, authorities believe additional consultations are necessary before introducing a new framework for the industry.
Officials added that Prime Minister Shehbaz Sharif has expressed concern over the continued delay in implementing the new auto policy. The prolonged discussions have raised uncertainty for vehicle manufacturers, importers, and consumers.
According to sources, there is little chance that negotiations with the IMF will be completed within the next month. Both sides are expected to continue reviewing the revised draft before reaching a final agreement.
The delay has also been linked to unresolved differences between the Ministry of Science and Technology and the Ministry of Industries and Production. Officials have yet to settle key policy issues, making it difficult to finalize the new framework.
Until a new policy is announced, revised tax rates introduced under the Finance Bill will continue to apply to hybrid and plug-in hybrid vehicles. Government documents state that these tax changes are temporary and will remain in place until the new automobile policy is implemented.
Once the revised policy comes into effect, authorities are expected to review the tax structure again. The government hopes the updated framework will provide clearer direction for Pakistan’s growing automotive market.
Industry experts believe the temporary increase in taxes will have an immediate impact on hybrid vehicle prices. They say both local manufacturers and importers are likely to pass the additional costs on to buyers.
According to market analysts, the price of hybrid and plug-in hybrid vehicles could increase by several hundred thousand rupees under the current tax structure. Higher prices may also reduce consumer demand in the short term.
Experts say uncertainty over future policies could affect investment decisions in Pakistan’s automobile industry. Manufacturers and importers are waiting for a clear long-term policy before making major business plans.
The ongoing IMF discussions are considered important because the new automobile policy is expected to shape future taxation, local manufacturing, and import regulations. Officials hope that continued negotiations will eventually lead to a policy that supports industry growth while meeting the country’s broader economic objectives.
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For now, the existing auto policy will remain in force, while the government continues consultations with the IMF and other stakeholders to finalize a revised framework for Pakistan’s automotive sector.
