Government has finally announced the new auto policy to be implemented from July 2021 to June 2026. Federal Minister for Industries and Production, Mr Khusro Bakhtiar shared the details of new policy in a press conference. Highlights of the new auto policy are:
Reduction in Car Prices:
In order to reduce the prices of locally assembled cars, the government has reduced the GST from 17% to 12% and abolished the 2.5% FED and ACD on cars up to 1,000cc engine capacity. Then for cars from 1,001cc to up to 2,000cc, FED has been reduced from 5% to 2.5% while 7% ACD has also been reduced to 2%. For vehicles above 2,000cc the 7.5% FED has been lowered to 5% while 7% ACD has been reduced to 2%.
With this, the prices of cars up to 1,000cc can be reduced by Rs 145,000, prices of cars between 1001cc to 2000cc will decrease by up to Rs 170,000 and for 2,000cc & above cars, a decrease of up to Rs 230,000 can be anticipated.
Import Duty On Electric Vehicles
There is a massive decrease in the import duty of Electric Vehicles (EVs) in the new Auto Policy 2021-2026, the import duty on EVs has been reduced from 25% to 10% for one year. Plus there is just 1% duty on imports of EV parts.
Measures to Curb Premium/ Own Money
Government has taken a few steps to curb the menace of premium/ own money culture from the market. A WHT of Rs 50,000 to up to Rs 200,000 will be applied if the first registration is not in the name of the person who originally booked the vehicle. Furthermore, automakers will have to pay KIBOR+3% if the delivery of a vehicle isn’t made within 60 days of booking. Lastly, maximum upfront payment on new car bookings to not exceed 20% of the invoice value.
Mr Khusro Bakhtiar, 17 shortlisted safety regulations will be met in different phases within the next 3 years in order to improve the safety standards of locally assembled vehicles. He said introduction of modern safety features would eventually make the automobile sector export-oriented.
Localization & Creation of More Jobs
The minister briefed that the government will update localized manufacturing of auto parts after every 6 months to ensure quick localization. Plus condition of 30% value addition has been introduced on imported raw materials and components which will be used in vehicle manufacturing in local market. Khusro Bakhtiar said efforts were being made to increase automobile production to 350,000 cars this year and increase their demand through incentives and other measure. Whereas more than 300,000 job are expected to be created in the auto sector.
Representatives of local auto sector have lauded the government for a very progressive new auto policy. Ali Asghar Jamali, the Chairman of PAMA said the announced policy interventions are aimed at translating the vision of Prime Minister Imran Khan which is all about growing the local industry and creating more jobs for our local youth. “I am confident that all stakeholders including customers, industry, part makers and government shall reap the benefits of new policy equitably,” he added.