ISLAMABAD: After imposing up to three per cent tax on gross sale value of conventional local and imported vehicles, the government approved a five-year subsidy scheme on Tuesday for the rollout of 116,000 electric bikes and 3,170 electric rickshaws/loaders, with an estimated cost of around Rs100bn.
The scheme is part of efforts to encourage the adoption of electric vehicles (EVs) in Pakistan, reduce oil imports, and foster environmental sustainability. Prime Minister Shehbaz Sharif is expected to launch the initiative on Aug 14 formally.
The decision was made at a meeting of the Economic Coordination Committee (ECC) of the Cabinet, which also discussed the New Electric Vehicle Adoption Levy (NEVAL). The levy is expected to generate Rs122bn, which will not only fund the subsidy scheme but also meet a key condition of the $1.4bn Resilience and Sustainability Facility (RSF) from the International Monetary Fund (IMF).
Finance Minister Muhammad Aurangzeb, who presided over the meeting remotely, was informed that a Rs9bn subsidy had already been earmarked for electric vehicles in the current year’s budget. To fund the scheme, the government imposed a 1pc NEVAL on local and imported vehicles up to 1300cc, 2pc on vehicles between 1,300cc and 1,800cc, and 3pc on vehicles above 1,800cc.
ECC approves Rs100bn subsidy scheme for electric bikes, rickshaws
The first phase of the subsidy will involve the distribution of 40,000 e-bikes and 1,000 e-rickshaws/loaders. The scheme will be implemented across the country, including Azad Kashmir and Gilgit-Baltistan, with 219 e-bikes reserved for outstanding students. The second phase will roll out the remaining 76,000 e-bikes and 2,170 e-rickshaws/loaders.
The ECC highlighted that the adoption of electric vehicles was crucial not only for environmental reasons but also for reducing the country’s oil import bill and utilising excess power for productive purposes. The government’s New Electric Vehicle Policy aims to raise the number of electric vehicles to 30pc of all new vehicle sales by 2030, aligning with Pakistan’s commitments under the Paris Agreement.
One of the main barriers to the adoption of electric vehicles is the higher upfront cost compared to traditional internal combustion engine vehicles. To address this, the subsidy scheme will focus primarily on electric two and three-wheelers, to be implemented over the next five years.
The financing options will include both conventional and Islamic loans, with a maximum loan size of Rs200,000 for e-bikes and Rs880,000 for e-rickshaws/loaders. The markup rate will be set at six months KIBOR plus 2.75pc, with loan tenures of two years for e-bikes and three years for e-rickshaws/loaders.
The government will provide a 20pc portfolio guarantee on a first-loss basis, while the debt-to-equity ratio will be 80:20. The government will contribute a maximum of Rs50,000 for an e-bike and Rs200,000 for an e-rickshaw/loader. Additionally, the government will cover the full cost of the markup, effectively making the loans interest-free for borrowers.
To be eligible for the subsidy, applicants must be between 18 and 65 years old for e-bikes and 21 to 65 years old for e-rickshaws/loaders. The quota for rickshaws/loaders will be allocated based on provincial population, with 10pc reserved for Balochistan.
A minimum of 25pc of e-bike quotas will be reserved for women, and 10pc will be set aside for individuals using e-bikes for commercial purposes, such as delivery services. For e-rickshaws/loaders, priority will be given to individuals, with any remaining quota allocated to fleet operators, capped at 30pc.
Applications for the scheme will be processed through a digital platform, allowing for transparent tracking and selection. If demand exceeds the provincial or segment quota, applicants will be selected through an electronic balloting system. Only shortlisted manufacturers and assemblers, approved by the Engineering Development Board (EDB) based on technical capacity and financial strength, will be eligible to participate.
In addition to the electric vehicle scheme, the ECC approved a supplementary grant of Rs30bn, requested by the Finance Division, to settle outstanding claims from the previous fiscal year under the Telegraphic Transfer Charges Incentive Scheme. The Finance Division was also instructed to conduct a detailed assessment of the Pakistan Remittance Initiative, with recommendations due by mid-September.
Published in Dawn, August 6th, 2025
