New Auto Policy to Support Newcomers and More Affordable Cars

Engineering Development Board (EDP) and Ministry of Industries and Production have started working on the new Automotive Industry Development and Export Plan (AIDEP) 2021-26 as the existing Auto Development Policy (ADP) 2016-21) is set to expire in June this year.

According to reports, the AIDEP 2021-26 will focus on facilitating the manufacturing of affordable cars, which will lead to cost reduction, price stability, and employment generation in the country.


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AIDEP 2021-26 is also expected to significantly reduce customs duty, additional customs duty, and federal excise duty for the entire auto sector.

However, in return, the government will negotiate with car manufacturers for a reduction in car prices, increase in localization, and concerted efforts to increase exports.

Note that around 45% of the price of a vehicle that a consumer pays goes to the government in duties and taxes.

It includes customs duty on import of localized parts is 45% while 30% on non-localized parts and a 7% additional customs duty on import of all parts. There is also up to 7.5% federal excise duty on different engine capacities. In addition to this, there is a 17% sales tax on the sale of a car.


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An industry source said that the government can significantly reduce car prices by slashing taxes and duties.

For instance, if automakers are to bring the price of a modern hatchback down to Rs. 1 million from Rs. 1.5 million, the government must reduce exorbitant duties and taxes, the source added.

  • Nahi janab, after buying the car there are further taxes. E.g. Advance Income Tax and Registration Tax.

    On this point I am with the car manufacturers that GOV needs to cut taxes significantly to reduce car prices. Otherwise, it’s just topi drama from the GOV.

  • I do not see GOVT reducing any duty or taxes because IMF wont allow this. Already they have been asking govt to increase taxes to pay back loans.

  • کہاں کی افورڈ ایبل بھائی.. عام پاکستانی کے لیے تو اب کوئی کار بچی ہی نہیں ہے.. ایک مہران تھی وہ بھی بند ہو گئی

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