PEVMA raises red flags on PAVE localization plan

The Pakistan Electric Vehicles Manufacturers Association (PEVMA) has formally conveyed its concerns to the Engineering Development Board (EDB) regarding the proposed mandatory localization requirements under the Pakistan Accelerated Vehicles Electrification (PAVE) Program. In a letter dated January 31, 2026, addressed to the Chief Executive Officer of EDB, PEVMA appreciated the government’s efforts to promote electric mobility but cautioned against enforcing rigid localization targets that could harm the industry and investor confidence.

In the letter, PEVMA’s, Senior Vice President, Waqas Ahmad Butt highlighted that the proposal to mandate over 85 percent localization of EV parts within the next three years, enforced through undertakings and performance bank guarantees, may conflict with Pakistan’s international trade obligations. As a signatory to the World Trade Organization (WTO), including the Trade-Related Investment Measures (TRIMs) Agreement, Pakistan is required to avoid discriminatory practices against imports. The association warned that compulsory local content requirements, particularly when backed by penalties or restrictions on lawful imports, could be viewed as inconsistent with WTO rules and expose Pakistan to potential trade disputes.

Waqas Ahmad Butt further pointed out that Pakistan already has a WTO-compliant, tariff-based localization framework in place. Under the existing system, EV-specific non-localized components such as batteries, motors, controllers, converters and chargers are subject to a minimal customs duty of 1 percent, while non-EV-specific parts attract cumulative duties of up to 46 percent. According to PEVMA, this differential duty structure naturally incentivizes localization without resorting to coercive measures.

In its conclusion, PEVMA reaffirmed its commitment to Pakistan’s industrialization and electrification goals. The association emphasized that localization achieved through predictable, tariff-based policies and close collaboration between the government and industry would be faster, deeper and more sustainable. PEVMA urged policymakers to rely on market-driven incentives rather than penalties and guarantees to support the long-term growth of Pakistan’s electric vehicle sector.