ISLAMABAD (Kashmir English): The federal government has proposed a major reduction of 20 percent in import duties on hybrid vehicles under the new Auto Policy 2026-31.
According to the draft, the new auto policy will remain in effect for five years. The final draft of the policy has been submitted to the Prime Minister, Shehbaz Sharif.
The policy aims to attract investment, increase vehicle production and promote exports from the country’s automotive sector.
The proposed incentives are also aimed at encouraging the adoption of hybrid and other new vehicle technologies while strengthening local manufacturing and increasing automotive exports.
Proposed Duty Reductions
Under the policy draft, a phased reduction in tax has been proposed on the import of hybrid vehicles, trucks, and buses above 1800 cc over the next 5 years.
It is proposed to reduce the duty on hybrid vehicles up to 850cc cc from 50 percent to 30 percent. A similar reduction has also been proposed for hybrid vehicles with engine capacities between 850cc and 1,500cc.
The draft further proposed a phased reduction in duty on hybrid vehicles between 1,501cc and 1,800cc to 20 percent over the next five years.
The government has also proposed a 20% reduction in the tax on hybrid vehicles with engine capacities above 1,800cc over the five-year policy period.
The new auto policy also includes a proposal to reduce the duty on hybrid trucks from 30 percent to 15 percent.
According to the document, the duty on hybrid commercial vehicles is to be reduced from 60 percent to 30 percent, while the duty on hybrid buses is to be reduced from 30 percent to 15 percent.
The proposals come after the government introduced changes to the import duty and tax structure for vehicles in the last budget proposal for Fiscal Year 2026-27.
The final Auto Policy will take effect after approval by the Prime Minister and completion of the required government procedures.
