LAHORE: The Pakistan Association of Auto Parts Manufacturers (PAAPAM) has issued a stark warning against the implementation of the newly announced National Tariff Policy 2025-30, cautioning that the proposed changes could trigger the collapse of much of the domestic auto parts manufacturing industry.
The association believes that the policy, which aims to simplify the tariff structure by capping the maximum import duty at 15 per cent, could severely destabilise Pakistan’s industrial base by exposing local manufacturers to a surge of cheaper imports.
PAAPAM Chairman Usman Aslam Malik said that the auto parts sector has long been a pillar of Pakistan’s industrial growth, employing thousands of skilled workers and contributing significantly to economic stability. He warned that the abrupt tariff rationalisation may lead to the loss of as many as 500,000 jobs, undermining livelihoods and weakening the national manufacturing capacity.
He criticised the narrow zero to 15 per cent tariff band for eliminating the possibility of a structured cascading tariff system, which is essential to encourage value addition and maintain a balanced industrial ecosystem. Coupled with high energy costs, inefficient labour markets and a burdensome tax regime, the new policy could further erode the competitiveness of domestic producers.
PAAPAM also pointed to the uneven playing field in global trade, noting that while China offers up to a 13 per cent export rebate on certain products, Pakistan’s duty drawback rate remains at just 2.0 per cent. This disparity, the association argued, places local manufacturers at a serious disadvantage in international markets.
The association further warned that reducing tariffs on imports may worsen Pakistan’s foreign exchange position by encouraging greater import volumes, thereby putting additional pressure on already strained reserves. It dismissed the idea that trade liberalisation alone can drive export growth, arguing that domestic industry must first be strengthened for exports to become sustainable.
In light of these concerns, PAAPAM has urged the government to retain the current tariff structure for at least one more year and to delay any changes until a thorough consultation process has taken place with all relevant stakeholders. A phased and carefully calibrated approach, it said, would allow time for local industries to adjust, while minimising the risk of abrupt factory closures and job losses.
“Our industry has made significant progress in quality, innovation, and supply chain efficiency, yet these achievements are at risk of being undone by the new tariff policy,” said Shehryar Qadir, Senior Vice Chairman of PAAPAM. “We call for an open dialogue with government stakeholders to devise a balanced approach that supports industrial sustainability while preserving competitiveness.”