IMF Sets Strict Conditions for Vehicle Safety Standards

KARACHI: The International Monetary Fund (IMF) has set tough conditions for both locally manufactured and imported vehicles, requiring Pakistan’s auto industry to comply with enhanced safety measures from 1st October this year.

According to the sources, locally assembled cars will be required to meet 57 safety standards starting October. Currently, local manufacturers are complying with only 17 standards, meaning they must implement an additional 40 within the next few weeks.

To ensure compliance, the government has decided to establish a Pakistan Automotive Institute to check the quality of locally manufactured parts.

The federal government has also finalized significant legislation in line with IMF benchmarks. The Motor Vehicle Industry Development Act 2025 has been prepared, under which no uncertified new vehicles will be allowed for sale in the market from October 1.

All categories of locally manufactured vehicles will require a license from the central headquarters, while vehicle imports and sales will be subject to licensing from a newly established board.

For electric vehicles, a mandatory inspection system will be introduced to check battery life, performance, and durability before allowing imports.

Furthermore, from September 30, 2025, Pakistan’s import policy order will be revised, and from October 1, the import of substandard or low-quality vehicles will be completely banned.

The automobile sector in Pakistan had already warned that the industry is on the brink of collapse due to measures introduced in the National Tariff Policy (NTP) 2025-30, cautioning that these could result in over two million people losing their jobs and jeopardise an annual income of Rs 878 billion along with Rs 302 billion in tax revenue.

This concern was raised by industry representatives during a joint meeting of the Senate Standing Committees on Finance and Revenue, and Industries and Production, co-chaired by Saleem Mandviwalla and Aon Abbas, convened to discuss the challenges facing the automobile sector.

Officials from the Commerce Ministry, however, said that Pakistan has committed to the International Monetary Fund (IMF) to gradually lift restrictions on the commercial import of used motor vehicles, initially permitting cars less than five years old, provided they meet minimum environmental and safety standards by the first quarter of the 2026 fiscal year (by 30 September 2025).

From July 2026 onwards, a new regulatory and testing regime will be introduced to ensure compliance with safety and environmental benchmarks, replacing the current age-limit conditions on imports.