ISLAMABAD (Mudassar Ali Rana) – Negotiations between Pakistan, the International Monetary Fund (IMF) and the Tariff Policy Board on a new auto policy have yet to reach a conclusion, prompting the government to agree to extend the existing auto policy for another year.
An anonymous government official, speaking to Dunya News, said the government had not been able to fully implement the previous auto policy, while a new policy has yet to be introduced.
The source said Prime Minister Shehbaz Sharif has expressed concern over the delay in implementing a new auto policy. Manufacturers received incentives under the existing policy, but many locally produced vehicles do not meet international standards and therefore cannot be exported. Some manufacturers obtained incentives intended to promote vehicle exports without exporting vehicles.
The Ministry of Industries and Production was unable to defend the proposed policy during consultations with the IMF. The prime minister has directed officials to make the new auto policy more investor-friendly, with a focus on creating jobs.
The proposed policy includes adopting internationally recognized safety standards for locally manufactured vehicles. Companies that fail to meet global standards could face penalties. Negotiations are unlikely to conclude next month, making a one-year extension of the expired auto policy likely.
The draft policy also proposes measures to promote electric vehicles (EVs), plug-in hybrid vehicles and hybrid vehicles. It aims to ensure compliance with 62 safety standards for imported and locally manufactured vehicles in line with relevant United Nations requirements. Consultations are also continuing with the Federal Board of Revenue (FBR), the ministries of Science and Technology, Commerce and Law.
Differences have emerged between the Ministry of Science and Technology and the Ministry of Industries and Production over standards for four-wheelers.
During a meeting of the National Assembly Standing Committee's subcommittee on Industries and Production, chaired by Mahreen Razzaq Bhutto, the Additional Secretary of the Ministry of Industries and Production said the ministry was developing internationally recognised standards for four-wheelers. The Joint Secretary of the Ministry of Science and Technology said setting such standards falls under the science ministry's responsibility, not the Ministry of Industries and Production.
Officials from the Ministry of Science and Technology maintained that the proposed regulations for four-wheeler manufacturing were not properly formulated. The subcommittee expressed concern over the lack of coordination between the ministries, describing it as regrettable. It also took notice of the absence of senior officials from the ministries of Industries and Production and Science and Technology and expressed displeasure over delays in the submission of documents.
During a briefing on electric bikes, Pakistan Standards and Quality Control Authority (PSQCA) officials told the subcommittee that more than 100 out of 3,000 applicable standards are currently being implemented. They said the government has allocated Rs100 billion in subsidies until June 2030, with consumers eligible for subsidies of up to Rs80,000 per electric vehicle.
Officials also said the Engineering Development Board (EDB) has issued licences to 101 companies to manufacture two- and three-wheelers, while EV bike manufacturing is showing positive growth across the country. They added that batteries account for Rs90,000 to Rs150,000 of the cost of an EV bike priced at around Rs250,000. EDB Chief Executive Officer Hammad Ali Mansoor said lithium batteries have a three-year warranty and a lifespan of up to eight years.
The meeting also revealed that no EV charging stations have yet been established anywhere in the country, despite licences having been issued to 116 companies to set them up. It was also disclosed that some EV bikes in Khyber Pakhtunkhwa are not registered with the Pakistan Standards and Quality Control Authority.
Representatives of the EV Manufacturers Association said locally produced batteries meet only 5% of demand, with the remaining 95% being imported. The subcommittee directed provincial authorities and federal ministries to jointly implement rules for EV bikes, warning that locally assembled batteries are now being manufactured in residential areas, posing serious safety risks.
The Ministry of Industries and Production and the Ministry of Science and Technology declined to take responsibility for regulating the issue. The subcommittee summoned officials from the provincial governments and the ministries of Energy, Industries and Science and Technology to its next meeting. It was also agreed that the Engineering Development Board would prepare and implement rules for EV bikes.