Information Minister Attaullah Tarar and Adviser to the Prime Minister on Industries and Production Haroon Akhtar Khan unveiled the policy at a joint press conference in Islamabad on Friday.
Tarar said the policy would encourage local vehicle manufacturing and exports while ensuring access to affordable, high-quality and environment-friendly vehicles.
He said the government had consulted all relevant stakeholders, analysed technical data and studied automobile policies adopted by different countries before finalising the framework.
For decades, Pakistan maintained high import duties on vehicles to protect the local automobile industry. However, Tarar said this protection had failed to deliver the innovation and features available to consumers in other countries. He added that the original purpose of protecting the industry was to improve vehicle quality and facilities for ordinary consumers.
The minister said Prime Minister Shehbaz Sharif had directed the government to introduce measures to make vehicles more accessible to middle-class households.
Tarar also highlighted the growing use of electric scooters and motorcycles, particularly among women travelling to schools, colleges and workplaces. He said promoting electric vehicles would help reduce environmental pollution and Pakistan's dependence on imported fuel.
He added that a reduction in the country's oil import bill would ease economic pressure and allow the government to spend more on public facilities, infrastructure, healthcare and education.
Describing the policy as comprehensive, Tarar said it included special incentives for electric vehicles while also encouraging local manufacturing. He said the automobile industry could not achieve its full potential without manufacturing vehicles for export and creating employment opportunities.
The minister clarified that the policy would not affect existing facilities for petrol-powered vehicles with engine capacities of up to 800cc.
To encourage clean energy, customs duty has been abolished on equipment used to establish electric vehicle charging stations, while sales tax on such equipment has also been reduced.
Tarar invited manufacturers to establish production facilities in Pakistan, manufacture fully electric vehicles and export them. He said this would help provide Pakistanis with affordable, high-quality transport while reducing fuel costs and the country's import bill.
He said petrol expenses accounted for a significant share of household budgets and that fluctuations in oil prices contributed to inflation. Comparing the initiative with the growth of solar energy in Pakistan, he described the new auto policy as a major step towards promoting affordable and environment-friendly transport.
Haroon Akhtar Khan said the policy was based on six key areas: affordable vehicles for middle- and lower-middle-income households, increased exports, promotion of electric vehicles, greater localisation, improved vehicle safety and transparency.
He said import duties had been reduced to lower vehicle manufacturing costs and make locally produced cars more accessible, particularly to low-income consumers. Reducing the prices of vehicles with engine capacities below 1,300cc was a particular priority of the prime minister, he added.
The adviser also highlighted measures to strengthen local manufacturing and promote automobile exports.
Responding to a question, Tarar said the local automobile industry had enjoyed protection and a market with limited competition for decades, which had affected innovation and consumer facilities. He said the new policy would encourage more manufacturers to enter the market, increasing competition and providing consumers with greater choices.
Asked about non-custom-paid vehicles in Khyber Pakhtunkhwa, the minister said a transparent system was being developed to ensure that all vehicles were registered through the Customs and Excise departments.
He said such vehicles had been used in terrorist incidents in the past and added that the government was working to address the issue through a formal registration policy.
