The transformation of an economy is contingent upon optimum utilization of resources in the most productive manner. Economy will move at maximum potential when conducive business environment is created through favorable and business friendly government policies. Therefore, an auto-sector transformation policy, based on the identification and resolution of contemporary challenges and addressing sectorial inefficiencies is required to be in place. This oped series deals with Pakistan’s Auto Industry development & Export Policy (2021-26) Historically, domestic auto companies have been kept protected from international competition through tariffs and tax cuts. However, the outcome of policies and performance of the sector have been unsatisfactory due to confinement to assembly of vehicles and nonexistent localization of products. The provision of protection, has proved to be futile and the expected comparative advantage could not be realized. In reality, the protection kept the industry inefficient and restricted the scale of operation. The auto companies find it more profitable to continue the assembly business, the government remained complacent on the revenues generated from tariffs and taxes, but it’s the consumers who are at the receiving end due to high pricing and low quality. Therefore, the policy objective should be to facilitate higher production volume, more investment and better-quality vehicles with the latest technology and to create a balance between sector growth and consumer benefit, to ensure sustainability of all stakeholders; and provide consistency and positive predictable policy framework for investors. The spirit to achieve deletion program was local production of vehicles which continued from 1987 to 2004. Importantly, the firm or product specific localization program changed to industry specific localization program which was also monitored by annual audit. At the same time localization could not be achieved in spares and components etc, many of them were high tech and value added, and critical spares continued to be imported. Since its inception in 1995, Engineering Development Board (EDB) was taking care of the deletion program. The deletion program was further replaced with Tariff Based System (TBS) in order to make it compliant with Trade Related Investment Measures (TRIMS) under WTO regime from 01-07-2006 onwards. Focus was placed on value addition viz-a-vis low cost in the production by updating the relevant regulations twice a year. Historically, domestic auto companies have been kept protected from international competition through tariffs and tax cuts. In the light of regulations and goals, a long-term automotive tariff plan was required. Hence AIDP was announced in 2007 in consultation with stakeholders for 5 years. It was focused on investment, up gradation of technology, increase in exports and creation of jobs. The assumptions and expectations were dashed to the ground as the tariff rates could not be implemented in the approved 5 years plan with certain other negative aspects like economic recession and decrease in production during 2008-09 viz a vis absence of fiscal space. Car financing or leasing facility became dysfunctional thus adding to the production deficit in 2011-12. Localization of high tech and value-added spares/components also could not be materialized. No significant achievement was made in producing skilled and trained human resource. Hence AIDP remained unimplemented due to lack of vibrant Government support. No significant investment could be made except introduction of one firm Al-Haj FAW. The tariffs continued till issue of ADP 2016-2021 and during all these 4 years the industry sailed without a clear policy guideline. To attract competition, low tariff structure was provided in the next policy 2016-21 to the new investors with following five broad features these are, new investment incentives (Greenfield for new, Brownfield for Closed Units); Five-year tariff plan for existing OEMs & new entrant; Payment channels Streamlined to curb misuse of import Policy (Vehicles), under SRO.52(1)/2019; Provision of regulatory and enforcement mechanism for Quality safety & standards; Establishment of Pakistan Automotive institute (PAI). Rationale for Auto Policy: As the Automotive Development Policy 2016-21 was expiring in 2021, therefore there was need for either extension of the existing policy or the introduction of a new policy. Thus, a new policy titled as “Auto Industry Development and Export Promotion Policy AIDEP2021-26” was launched. It is pertinent to mention that some of the results of previous policy ADP 2016-21 have been impressive. Thus, in this context, the evaluation for the need for a new policy becomes important. Problems of the auto sector such as non -localizations of auto parts, limited competition amongst producers, low investments, no industrial infrastructure, limited safety features and long delay in delivery of Vehicles persisted. Broadly, the policy is categorized into following nine areas: Focus on New Technologies; Encouragement of New Product Policy; Emphasis on Enforcing Safety Regulations; Promotion of Local Part Manufacturing; Export Promotion; Protection of Consumer Interests; Development of Local Talent; Introduction of new Platforms for Auto Motive Industry Growth; Elaborate Mechanisms for Applications Processing. (To be concluded). The writer works at a public policy think tank. He can be reached at saudzafar5@gmail.com