Govt targets 300,000 vehicle production in FY22

July 7, 2021

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Federal Minister for Industries and Production Khusro Bakhtia has said that the government intends to increase vehicle production in Pakistan to 300,000 vehicles per year, and that policy initiatives, including tax reduction measures announced in the current fiscal year budget, will help achieve this.

He was talking at a media conference along with Federal Information Minister Fawad Chaudhry in Islamabad.

Mr. Bakhtiar added that tax reduction notification will be issued within a day or two, paving the way for lower prices for all cars.

According to him, the total capacity of the Pakistani auto sector is 415,000 vehicles per year currently. On average Production of each car generates five jobs. As we enter the stabilization phase after the economic downturn, we focus on growth.

He said Pakistan produced only 164,000 vehicles last year, but with a new automotive policy, the government intends to bring production to at least 300,000 units.

The government decided to lower the federal excise tax (FED) and additional tariffs on all cars, while the sales tax for small vehicles ( up to 1000 cc engine size) was also reduced. He also said that import duties on electric vehicles were reduced from 25% to 10%, which allowed the import of electric vehicles into Pakistan.

The Federal Minister said that due to tax cuts, prices for cars with an engine capacity of up to 650 cc would fall by Rs 105,000, while prices for cars with an engine capacity of 1,000 cc would fall by Rs. 145,000 rupees.

Bakhtiar said the increase in car production would create an additional 300,000 jobs. The minister further added that the country produced 2.6 million motorcycles last fiscal year, and the target for this year is to produce 3 million motorcycles, which will help create 75,000 additional jobs.

Localization is the focus of future automotive policy, he said. “Currently in Pakistan, localization in terms of cost in the automotive sector is 30-35%, and this is what we want to increase this year.

Government is currently focusing on Pro-Growth strategy and revival of Industrial Units is part of the same. The budgetary measures taken in FY2022 Budget are likely to support the economic growth in the country. Unofficial papers suggest that government wants to achieve 6% GDP growth in FY2022 which remain a difficult target, however not unlikely.