Overview
- Authorities will share the five-year Automobiles and Auto Parts Manufacturing Policy (2026–31) with the IMF for review before seeking federal cabinet approval as part of the $7 billion Extended Fund Facility.
- The 2026–27 budget is expected to start tariff cuts that lower the sector’s weighted average from 10.6% to about 9.5% with a roadmap to roughly 5.99% by 2030 under the National Tariff Policy.
- The draft sets a new four-slab tariff schedule of 0%, 5%, 10% and 15% and caps customs duty on fully built vehicles at 15% over five years while phasing out extra customs duty and regulatory duty and reducing base customs duty.
- Commercial used-car imports are now legal, with a temporary 40% regulatory duty planned for FY2026 that officials say will taper to zero, and the government has ended the personal baggage scheme and tightened gift and transfer-of-residence rules to curb misuse.
- A Motor Vehicle Development Act before parliament would let the Engineering Development Board enforce safety and emissions standards, and officials say the policy aims to raise local parts content and ease car prices, which could help buyers but strain local assemblers.