The Government of Pakistan has decided to extend the existing Auto Industry Development and Export Policy (AIDEP) 2021–26 for another year after failing to reach an agreement with the International Monetary Fund (IMF) and the Tariff Policy Board on a new automobile policy. The decision provides temporary stability for the automotive sector while discussions on long-term reforms continue.
According to sources in the Ministry of Finance, the previous auto policy expired at the end of June 2026, but a replacement could not be finalized due to unresolved differences over tariff reforms and policy measures. Officials confirmed that the revised draft of the proposed five-year auto policy will undergo another round of negotiations with the IMF before it can be approved.
The proposed policy is part of Pakistan’s commitments under its IMF economic reform program. It aims to align the automotive industry with the National Tariff Policy 2025–30 by gradually reducing import duties, eliminating additional customs and regulatory duties, increasing market competition, and promoting vehicle exports.
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Sources also revealed that the government was unable to fully implement several key objectives of the previous auto policy before its expiration. Prime Minister Shehbaz Sharif has reportedly expressed concern over the slow implementation of reforms and the delay in introducing a new policy framework.
Industry experts believe the extension will provide short-term certainty for automakers, investors, and consumers. However, they also warn that prolonged delays in finalizing the new policy could affect investment decisions, production planning, and the overall growth of Pakistan’s automobile industry.
Another round of discussions between Pakistan and the IMF is expected in the coming weeks. However, officials believe that reaching a final agreement within the next month may remain difficult due to ongoing negotiations over tariff structures and broader economic reforms.
Until a consensus is reached, the current auto policy will remain in effect, allowing manufacturers to continue operations while the government works toward a modern, competitive, and export-oriented automotive policy that supports sustainable growth and aligns with Pakistan’s long-term economic objectives.
