ECC Approves 5 Years (EV) 2-3 Wheelers Policy

Economic Coordination Committee (ECC) has approved five years Electric Vehicles (EV) 2-3 wheelers Policy, in principle, with substantial incentives.

The inter-ministerial committee finalized EV Policy recommendations in the second meeting with a consensus on electric 2-3 wheelers (motorcycle, rickshaws, loaders) and heavy commercial vehicles (buses & trucks).

ECC Approves 5 Years (EV) 2-3 Wheelers Policy

The policy recommendations were agreed after an analysis of policies prepared by the Ministry of Climate Change (MoCC) and Ministry of Industries and Production (MoI&P).

The recommendations are based on: (i) promoting use and manufacturing of electric 2-3 wheelers and heavy commercial vehicles; (ii) technology acquisition; (iii) encouraging EV manufacturing; (iv) mitigating negative aspects of climate change through vehicle emission reduction; (v) employment generation through new investments; (vi) a reduction in oil import bill; and (vii) usage of excessive electricity, etc.

The incentives being offered on 2-3 wheelers will be General Sales Tax (GST) at sales stage 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. 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.

The import of new EVs (2-3 wheelers) in CBU condition at concessionary rate of customs duty (50% of prevailing rate) reduced to 10 per variant and capping at 200 units instead 100 and 2000.

 Heavy Commercial Vehicles (HCVs) – Electric will have 1 percent Customs Duty on import of CBUs (Electric Buses, Trucks & Prime Movers). Import of entire CKD will be allowed at 1 % Customs duty to local manufacturers and General Sales Tax @ 1 % at sales and waived off (0%) at import stage.

The Electric Vehicles, will be exempted from registration fee, annual renewal fee, permits and reduction of toll tax to 50 percent for HCVs. 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 year income tax exemption for manufacturers of EV equipment and infrastructure development and 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 as per the policy.