Electrical Vehicles (2-3 wheelers & Heavy Commercial Vehicles

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SUMMARY FOR THE ECC OF THE CABINET

Industries and Production (I&P) Divisionnotified a committee for EV Policy Formulation on 5th Sept 2019 in view of notification of Cabinet Division dated 27th  August 2019, wherein it was stated that policy electric vehicle falls under the domain of Ministry of Industries and Production. Copy of Cabinet Division’s notification is enclosed at Annex-A for reference.

2. Initially, Ministry of Climate Change (MoCC) made a presentation Honourable Prime Minister by Ministry of Climate Change (MoCC) on 17 May 2019 for introduction of electric vehicles in Pakistan. The Cabinet advised further stakeholder consultation on EV Policy. EDB/MoIP continued consultations with potential investors and the subject was discussed as agenda item of various meetings of Auto Industry Development Committee (AIDC), which is a cabinet approved body comprising of public and private sector members, mandated to recommend measures for growth of automotive sector. AIDC recommended phase-wise introduction of electrical vehicles starting with 2-3 wheeler motorcycles and rickshaws followed by heavy commercial vehicles (HCVs) including trucks and buses. AIDC further proposed promotion of  both; electric vehicle and hybrid technologies in four wheelers (Cars and Sports Utility Vehicles, SUVs) beyond Automotive Development Policy (ADP 2016-21) i.e.  July 2021 onwards to maintain its sanctity.

3. Federal Government formulated a high level Inter-Ministerial Committee under the Chairmanship of the then Advisor to Prime Minister on Industries and Productionin pursuance of MoIP’s Notification No 2(48)/2020 dated April 1, 2020to discuss the subject policy at length before submission to ECC of the Cabinet. The notification was later amended to include Minister for Industries and Production as the Chair and Secretary Ministry of Commerce as a member. Copies of relevant notifications are enclosed at annex- B.

4          Proposals related to EV manufacturing and introduction in local market were discussed at length in first meeting of  inter-ministerial committee held under Chairmanship of the then Advisor to the PM on Industries and Production on April 06,2020. Minutes of meeting are enclosed as annex-C for review. The second meeting of said inter-ministerial committee was held on June 03, 2020 under chairmanship of Minister for Industries and Production. As decided in the first meeting, the comparison of policy documents prepared by Ministry of Climate Change and Ministry of Industries and Production was discussed in detail. The policy recommendations to the extent of 2-3 wheelers and HCVs were finalized in the meeting. The copy of presentation including decisions taken by inter-ministerial committee is enclosed as annex- D.

5. The EV Policy by EDB/ I&P Division has been prepared with objectives of technology acquisition, encourage auto and related industry to adopt EV manufacturing, mitigate negative aspects of climate change through reduction in emissions from transport sector, employment generation through new investments, reduction of oil import bill, usage of excessive electricity etc. while giving due consideration to infrastructure development, which will provide cost effective solution to the commuters in the form of E-vehicles. The major recommendations of the policy including 2-3 wheelers, HCVS and general proposals are as under:

2-3 Wheelers

  1. General Sales Tax (GST) at sales stage to fixed for 2-3 wheelers @ 1% for five years i.e. the policy period. Sales Tax at import stage to be waived off (0%) to avoid refunds.
  • EV Specific Parts of 2-3 wheelers to be imported at 1 % Customs Duty (CD) for five years. Lists of major EV Specific Parts are enclosed as annex E.
  • Exemption of 2-3 wheelers from Registration and Annual Token Tax. Reduction of toll tax to 50% for EVs.
  • Existing  manufacturing regime for 2-3 wheelers with respect to non EV parts & components to remain intact to safeguard already achieved localization
  • Benefits of EV policy to be extended to both; existing and new manufacturers.
  • Import of new EVs (2-3 wheelers) in CBU condition at concessionary rate of duty (50 % of the prevailing rate of custom duty)  to be linked with establishment of manufacturing facilities i.e. 100 units per variant with maximum of 2000 units allowed to be imported under concessionary regime

Heavy Commercial Vehicles (HCVs)–Electric

  • 1 % Customs Duty on import of CBUs (Electric Buses, Trucks & Prime Movers)
  • Import of entire CKD allowed at 1 % Customs duty to the local manufacturers
  • General Sales Tax @ 1 % at sales and waived off (0%) at import stage.
  • Exemption of registration fee, annual renewal fee, permits and reduction of toll tax to 50 percent for HCVs.

General Proposals for 2-3 wheelers & HCVs

  • Localization of parts and components to be reviewed after 2 years  announcement of policy 
  • Duty and Tax Free  import of plant and machinery to be allowed to both; existing and new entrants in both 2-3 wheelers & HCVs
  • Five year income tax exemption for auto part manufacturers for setting up  manufacturing facility for EV related equipment
  • Inputs for EV vendors to be exempted from duties and taxes for 5 years (applies to in-house manufacturing by OEMs also)
  • The funding facility of State Bank of Pakistan to encourage green investments will encompass EV manufacturers, EV parts, components and module manufacturers, EV infrastructure development including charging stations
  • Five years income tax exemption for manufacturers of  EV equipment and infrastructure development
  • Import of chargers with the CKD to attract 1 % Customs Duty and 1 % Sales Tax whereas import of charging stations for electric vehicle under HS Code 8504.4030 already allowed at 0 % Customs Duty to continue

6. Ministry of Climate Change, Ministry of Science and Technology, Ministry of Commerce, Ministry of Planning, Development and Special  Initiatives, Advisor to PM on Institutional Reforms and Austerity Measures, SAPM on Petroleum and Deputy Chairman Planning Commission  have already endorsed the proposals contained in para-5 ante during the inter-ministerial meetings.

7. Approval of the ECC is solicited to the proposals at para-5, above.

8. The Minister for Industries and ProductionDivision has seen and authorized the submission of this Policy to the ECC.

                                                                                                                                    (AFZAL LATIF)

Secretary

June, 2020

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