New auto policy delayed as Pakistan, IMF 'fail to reach consensus'

ISLAMABAD: The existing Pakistan auto policy is likely to remain in place for another year after negotiations on the new auto policy between the International Monetary Fund (IMF) and the Tariff Policy Board failed to reach a conclusion, ARY News reported on Tuesday, citing sources. 

According to sources in the Ministry of Finance, it has been agreed to continue the previous auto policy for an additional year.

Sources said further discussions with the IMF will be held on the revised draft of the new auto policy. The Pakistan government has also been unable to fully implement the previous automobile policy, sources added.

The previous policy expired on June 30, while the new auto policy could not be introduced, according to Ministry of Finance sources.

Sources said Prime Minister Shehbaz Sharif has also expressed concern over the delay in implementation of the automobile policy. The possibility of finalizing negotiations on the new auto policy during the next month also appears unlikely, sources said.

Differences between the Ministry of Science and Technology and the Ministry of Industries and Production have also not been resolved, according to sources.

Read more: Auto policy to make hybrid cars expensive in Pakistan?

Until a new auto policy is introduced, the revised tax rates will apply to hybrid and plug-in hybrid vehicles.

It was also made clear in the Finance Bill documents that the increase is a temporary measure that will remain in force until the government announces and implements a new automotive policy.

The tax structure is expected to be reviewed once the new policy takes effect.

Auto sector experts say the higher tax rates will affect both local manufacturers and vehicle importers, leading to an immediate increase in the prices of hybrid and plug-in hybrid vehicles by hundreds of thousands of rupees.

They also caution that the higher prices could temporarily reduce consumer demand for hybrid vehicles.