Increased Taxes Curb Growth of Pakistan’s Auto Exports

Pakistan’s auto industry remains in a challenging state, with inconsistent car sales and a persistent decline in auto financing posing significant obstacles. In a recent meeting, the Auto Industry Development and Export Committee (AIDEC) highlighted how rising taxes and duties have crippled the sector’s ability to compete in international markets.

Earlier, the Pakistan Automotive Manufacturers Association (PAMA) and the Pakistan Association of Automotive Parts & Accessories Manufacturers (PAPAAM) expressed similar concerns over the abrupt hikes in taxes, which they believe are stifling growth.

The meeting gathered key stakeholders to address these challenges and brainstorm potential solutions for the industry’s growth and sustainability. Below are the main points discussed:

Key Points Discussed:

• Industry representatives raised concerns about how rising duties and taxes are hurting vehicle exports.
• There was a call for more Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) to reduce trade barriers and enhance export capabilities.
• The discussion emphasized the need for consistent policies to support the localization of parts and components, crucial for global competitiveness.
• Export targets for both existing and new OEMs were discussed, along with the proposal to expand the scope of SRO 693(I)/2006 to include additional components.
• The industry debated adopting international vehicle safety and environmental standards to remain competitive globally.
• The gradual phase-out of concessions on Completely Knocked Down (CKD) imports was considered to encourage local manufacturing.
• Auto parts vendors highlighted financial losses incurred when localized parts are discontinued and suggested that such parts should be standardized across multiple OEMs.
• The committee discussed the need to limit the import of used auto parts to protect local manufacturers.
• Duty protection for locally assembled buses—covering diesel, hybrid, and electric models—was also requested.
• A subcommittee was tasked with reviewing the auto industry’s regulatory needs quarterly, with a focus on supporting exports.
• The minister called for aligning auto parts manufacturing policies with related industries to boost localization and competitiveness.

This meeting marked a significant step in addressing the pressing issues faced by Pakistan’s auto industry. With input from various stakeholders, including senior officials from the Ministry of Industries and Production, Engineering Development Board (EDB), Ministry of Commerce, and representatives from leading auto companies, the discussions laid the foundation for much-needed policy reforms.

The industry is now keenly awaiting the implementation of these recommendations, which are essential for positioning Pakistan’s auto sector as a competitive player in the global market. Stay updated with Carkit for the latest developments and insights into the automotive sector.