ISLAMABAD: The auto industry in Pakistan is facing significant challenges in exporting vehicles due to the imposition of increased duties and taxes. Industry representatives expressed these concerns during a meeting of the Auto Industry Development and Export Committee (AIDEC) held here on Tuesday.
The industry stressed the urgent need for Pakistan to sign free trade agreements (FTAs) and preferential trade agreements (PTAs) to boost vehicle exports. Leaders also called for consistent policies to support the localisation of parts and components, which they argue is crucial for making two-, three-, and four-wheel vehicles competitive in the international market.
Without these measures, industry officials warned that Pakistan’s auto sector would continue to struggle globally, potentially stifling growth and limiting expansion opportunities.
The committee, chaired by Federal Minister for Industries and Production Rana Tanveer Hussain, deliberated on the implementation of policy instruments under the Auto Industry Development and Export Plan (AIDEP) 2021-26, focussing on export targets for existing Original Equipment Manufacturers (OEMs) and new entrants.
Key points discussed included the creation of a mechanism for adding parts to SRO 693(I)/2006, with an emphasis on incorporating new components. The industry also considered the implementation of WP.29 regulations and the gradual phasing out of concessions on the import of Completely Knocked Down (CKD) components for motorcycles and tractors from SRO 656(I)/2005 to the Fifth Schedule.
Further topics included the import of old and used auto parts, the incorporation of electric vehicle (EV)-specific components for four-wheelers under HS code 8703.8090 into the Fifth Schedule of the Customs Act, and the removal of sales tax on local inputs procured under the Export Facilitation Scheme (EFS).
Additionally, the industry emphasised the need for duty protection on locally assembled city and intercity buses—whether diesel, hybrid, or electric—and the imposition of a 25 percent regulatory duty on certain imports. These measures are seen as crucial steps towards enhancing the competitiveness of Pakistan’s auto industry in global markets.
Auto parts vendors highlighted significant challenges arising from the localisation process, noting that once a part is localised, its variant is often discontinued, leading to substantial financial losses for vendors. They recommended that when one OEM localises a part, it should be utilised by other OEMs needing similar components. They also suggested that the localisation of parts and sub-components should be time-bound to minimise disruptions.
The committee agreed on the need to impose a ban and penalties on the import of used auto parts to protect the local industry.
In concluding the meeting, the minister urged auto industrialists to focus on improving the quality, pricing, and export potential of Pakistani-made vehicles in the international market. He directed the formation of a subcommittee to review and address the auto industry’s regulatory needs quarterly, with an emphasis on supporting exports.
The minister also called for the development of an auto parts manufacturing policy aligned with related industries, asserting that enhanced localisation would lead to the more competitive pricing of Pakistani vehicles abroad.
The meeting was attended by Saif Anjum, Secretary MoIP; Engr. Khuda Bukhsh, CEO EDB; senior officers from the Ministry of Industries and Production, EDB, Ministry of Commerce, Science, and Technology, FBR, Ministry of Communication; and representatives from the Pakistan Automotive Manufacturers Association (PAMA), Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), and leading auto industries, including Ghandhara Industries, Master Motors, Pak Suzuki, Honda Cars, Honda Motorcycles/Atlas Group, Dysin Automobile, United Motors, Indus Motor Company, Dewan Motors, and Pro Tech.