ISLAMABAD: Prime Minister Shehbaz Sharif has asked officials to double the automotive industry’s export target under a new five-year policy that is still being finalized, contrary to media reports that it has already been approved, a senior Prime Minister’s Office official told Arab News on Friday.

The highly anticipated Automobiles and Auto Parts Manufacturing Policy (2026-31) has been under consideration since before the previous Auto Industry Development and Export Policy (2021-26) expired in June this year, with the government reviewing proposals aimed at making the sector more competitive and export oriented.

The new policy marks a strategic shift away from Pakistan’s historically inward-looking, assembly-focused model, which has relied heavily on discretionary regulatory support for the local industry. It seeks to establish a more transparent and export-oriented industrial environment, according to a presentation given to Sharif and seen by Arab News.

A senior Prime Minister’s Office official, speaking on condition of anonymity, said Sharif had expressed dissatisfaction with the industry’s export performance and directed officials to significantly raise the targets proposed under the new policy.

“For example, if the proposal was to ensure exports of locally manufactured cars, tractors, bikes and rickshaws to the tune of $4 billion per annum by the year 2031, the Prime Minister asked them to make it $8 billion per annum,” the official said, without disclosing the exact figures proposed by the committee.

The draft policy was first presented to the prime minister on June 2 and was subsequently shared with several review committees led by members of the Sharif cabinet. A committee established on June 19 under Energy Minister Awais Leghari was tasked with realigning the policy and held 14 sessions with leading economists to examine the available data and strike a balance between industrial protection and greater market competition.

The official said several working papers and draft proposals had been “deliberately leaked to the media by some quarters” without elaborating further, emphasizing that no final decision had been made and that a formal written draft was still being prepared.

The clarification comes after weeks of high-level discussions over the new framework. According to the official, the prime minister held multiple meetings with key cabinet members last week to review presentations from three separate committees established since June to fine-tune the policy.

The official said Sharif had outlined three broader guidelines for the new auto policy at a recent meeting.

“These are prioritizing the financial protection of ordinary citizens buying small cars, accelerating the promotion of electric vehicles and ensuring strict alignment with the country’s National Tariff Policy 2025-30,” the official said.

Pakistan’s National Tariff Policy 2025-30, introduced by the Ministry of Commerce, seeks to simplify the country’s tariff structure, reduce duties on industrial inputs and improve export competitiveness. It provides a roadmap for the gradual reduction of tariffs through 2030.

The official said Sharif had also questioned how many components used in locally assembled vehicles were actually manufactured in Pakistan, after decades of policies aimed at increasing local content and reducing reliance on imported parts.

Once the formal draft is finalized in the coming weeks, it will be shared with the International Monetary Fund before being submitted for final approval by the federal cabinet, the official added.

The draft is expected to be shared with the IMF to ensure that its proposed structural tariff reductions and changes to trade barriers remain consistent with Pakistan’s fiscal targets and structural benchmarks under its ongoing IMF-backed reform program.

Pakistan is midway through a 37-month, $7 billion Extended Fund Facility approved in September 2024, which has helped stabilize an economy that came close to sovereign default in 2023.