Pakistan domestic policy developments

The Pakistani government has initiated several domestic policy measures. In early October, the federal government introduced the National Housing Policy 2026, which focuses on providing affordable, eco-friendly, and climate-resilient housing for low-income and homeless citizens. During this period, officials also noted that international tensions between Iran and the United States were impacting domestic fuel prices.

By late October, Prime Minister Shehbaz Sharif approved a draft for the Automotive and Auto Parts Policy 2026–31. This proposal seeks to restructure taxes and duties for both conventional and new energy vehicles. The draft, which must undergo IMF consultation before seeking federal cabinet and parliamentary approval, introduces an Automotive Development Levy based on engine capacity. Under this plan, vehicles with engines between 1,001cc and 2,000cc would face a 2% levy, while those exceeding 2,000cc could face a 10% levy. Both imported and locally manufactured vehicles would be subject to these charges, though vehicles below 1,000cc, two-wheelers, and agricultural tractors would remain exempt.

For new energy vehicles, the policy proposes specific sales tax rates: 1% for Battery Electric Vehicles (BEVs), 6% for Range Extended Electric Vehicles (REEVs), and 9% for Plug-in Hybrid Electric Vehicles (PHEVs). Additionally, a 10% federal excise duty is recommended for electric vehicles valued above $75,000. While certain conventional models, such as the Toyota Yaris, may see price reductions due to customs duty adjustments, the final consumer impact remains dependent on the implementation framework and IMF negotiations.