ISLAMABAD: The automobile industry in Pakistan has urged the government to provide a clear and consistent policy on reducing vehicle import duties before the announcement of the upcoming budget.
Representatives from key industry associations expressed concern over proposed tariff changes that could negatively impact local manufacturing and urged the government to clarify its stance to avoid uncertainty in the sector.
Industry Concerns Over Proposed Duty Reductions
During a recent meeting with the Special Assistant to the Prime Minister, officials from the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) and Pakistan Automotive Manufacturers Association (Pama) voiced their worries about the government’s planned National Tariff Policy for 2025-2030.
The policy aims to gradually lower customs and regulatory duties, potentially reducing import duties on industrial machinery and auto components to around 15 percent by 2030.
The automotive sector warned that such reductions, if implemented without proper safeguards, might lead to a shift from local vehicle assembly and parts production toward increased vehicle imports.
This could undermine the domestic industry, which is already struggling with several challenges.
Challenges Faced by Local Manufacturers
Industry representatives highlighted various factors making local manufacturing costlier compared to regional competitors such as Thailand, India, China, Indonesia, and Vietnam.
High electricity prices, expensive raw materials including steel and plastic, and financial costs contribute to the increased production expenses faced by Pakistani manufacturers.
The high tariffs currently on completely built units (CBUs), ranging from 50 to 100 percent, contrast with the relatively lower 18 percent protection offered to locally produced auto parts against imported kits.
Officials emphasized that without a clear and stable policy, the sector will continue to face uncertainty, impacting investment decisions and long-term planning.
They called on the government to set transparent guidelines to encourage growth and competitiveness in the local auto industry.
