Pakistan’s automobile industry is facing growing uncertainty following recent tariff reforms that have significantly narrowed the duty gap between imported fully built vehicles and locally assembled vehicles, prompting manufacturers to call for greater policy clarity and long term support for domestic production. The concerns were highlighted in an analysis by Nasir Jamal published in Dawn Business.

The reforms, introduced as part of Pakistan’s commitments under the International Monetary Fund programme, are intended to liberalise trade and increase competition. However, industry leaders argue that the revised tariff structure has weakened the commercial case for assembling vehicles locally by making imported vehicles comparatively more attractive.

Ali Asghar Jamali, Chief Executive Officer of Indus Motor Company, said the current tariff structure has created an anomaly where importing a fully built vehicle can be cheaper than importing components for local assembly. While he expects the government to address the issue, he stressed that prolonged uncertainty could discourage investment.

Former Pakistan Association of Automotive Parts and Accessories Manufacturers Chairman Syed Nabeel Hashmi also warned that tariff reforms should strengthen competitiveness rather than undermine domestic manufacturing. He noted that Pakistan’s automotive sector supports an extensive network of parts manufacturers and skilled employment, all of which could be affected if production shifts towards imports.

The industry’s concerns have been amplified by the expiry of the Auto Industry Development and Export Policy 2021 to 2026, with a successor policy yet to be announced. Manufacturers believe that a clear and stable policy framework is essential to encourage long term investment, promote localisation, support cleaner vehicle technologies and ensure the sustainable growth of Pakistan’s automotive industry.