Customs law aligned with AIDEP to back EVs policy

ISLAMABAD: The Cabinet Committee for Disposal of Legislative Cases (CCLC), headed by the Minister for Law and Justice, has approved draft amendments to the Fifth Schedule of the Customs Act, 1969 to align it with the Automotive Industry Development and Export Policy (AIDEP) 2021-26 aimed at supporting Electric Vehicles (EVs) policy, sources told Business Recorder.

At a recent meeting, the Revenue Division informed the CCLC that the government has been incentivising local manufacturing of electric vehicles (EVs) to promote green transportation. For this purpose, fiscal incentives for electric vehicles — including two- and three-wheelers and commercial vehicles — were approved by the Federal Cabinet on June 16, 2020 for a period of five years with effect from July 1, 2020. Accordingly, Part-V(A) was inserted in the Fifth Schedule to the Customs Act, 1969 through the Finance Act, 2020 to provide customs duty concessions on electric vehicles, including Completely Built Units (CBUs) under Table-I and their Completely Knocked Down (CKD) kits and EV-specific parts under Table-II.

The Revenue Division further informed the committee that the Federal Cabinet subsequently approved the Automotive Industry Development and Export Policy (AIDEP) 2021-26 on December 21, 2021, under which customs duty concessions on EV CBUs, CKD kits and localised and non-localised parts were extended until June 30, 2026.

The committee was told that the existing concessions for CBU EVs under serial numbers 1 to 3 of Table-I and for EV CKD kits and EV-specific parts under serial numbers 1 to 6 of Table-II of Part-V(A) covered the fiscal incentives for a five-year period starting July 1, 2020, as incorporated through the Finance Act, 2020. However, following approval of AIDEP 2021-26 in December 2021, these concessions were extended until June 30, 2026.

It was further explained that the Ministry of Industries and Production, in a letter dated July 25, 2025, pointed out that the existing language of the concessions in the Fifth Schedule does not separately address EV-specific parts and other components of electric light commercial vehicles (LCVs) and vans as envisaged under AIDEP 2021-26.

The Revenue Division stated that the Ministry of Industries and Production had shared budget proposals with the Tariff Policy Board (TPB) on June 2, 2025, which included updating the concessionary regime in line with AIDEP 2021-26 along with other proposals. However, these proposals could not be discussed or finalised due to time constraints during the budget process concluding on June 10, 2025.

The matter was subsequently taken up again by the Ministry of Industries and Production and the Federal Board of Revenue (FBR) with the TPB on September 10 and September 16, 2025. The TPB advised the Ministry of Industries and Production, in consultation with the FBR, to proceed with the necessary legislative process in line with AIDEP 2021-26.

The committee was also informed that the Ministries of Industries and Production, Commerce, the Finance Division and the Law and Justice Division had agreed to the proposed amendments, while the Law and Justice Division had vetted the draft bill.

In view of the foregoing, a draft bill proposing amendments to Part-V(A) of the Fifth Schedule to the Customs Act, 1969 was submitted for approval.

After deliberations, the CCLC approved the draft bill titled “Amendment in Part-V(A) of Fifth Schedule to the Customs Act, 1969 – Alignment with Automotive Industry Development and Export Policy (AIDEP) 2021-26” and recommended its submission to the Federal Cabinet for final approval.—MUSHTAQ GHUMMAN