Adviser to the Prime Minister on Industries and Production, Haroon Akhtar Khan, detailed the Auto and Auto Parts Manufacturing Policy 2026-2031, aiming to shift the sector from import-dependent assembly to self-reliant, export-oriented manufacturing.

Key Highlights of the Policy:

• Mandatory Localisation: Failure to meet minimum domestic value addition will incur an additional 3 percentage points customs duty on non-localised CKD imports in the subsequent financial year.
• Vendor Support Fund: A Rs 2.1 billion programme will be launched via EDB and SMEDA to upgrade technologies and international certification for around 2,200 domestic auto parts makers.
• Export Targets & Incentives: The policy sets a cumulative export target of around $6 billion for 2026-2031, supported by a 5% drawback on net FOB export value and an additional 10% incentive on incremental exports.
• EV Import Concessions: Concessional 5% customs duty on imported Battery Electric Vehicles (BEVs) priced up to $15,000 for the first two years is strictly conditional upon establishing domestic assembly facilities.

Investor Takeaway: The policy structurally favors domestic auto parts suppliers and OEMs with strong localisation capabilities while imposing financial penalties on assemblers heavily reliant on non-localised imported kits.