Karachi: As the Government prepares to present the federal budget for the next fiscal year, the next national policy of 2025-30 rates, designed under the IMF guidance, is causing alarm among local car assemblers.
The plan proposes to gradually reduce import tariffs, liberalize used imports and allow commercial imports of used vehicles. The interested parties of the industry warn that these measures could destabilize the local automotive sector, erode currency reserves and expand the current account deficit.
Under the proposed tariff rationalization, duties in completely built vehicles (CBU) would be reduced to 15 percent for five years, below the current 20pc. The additional customs duty (ACD) and the regulatory duty (RD) will be eliminated, and the number of reduced tariff slabs from five to four. The government also plans to eliminate the fifth schedule and reduce the maximum slab rate to 15 percent.
This radical review of the commercial regime is apparently aimed at promoting export -led growth, but the automotive sector sees it as a serious threat. While the policy backed by the IMF seeks to put online the tariff structures of Pakistan with global standards, local manufacturers argue that it runs the risk of flooding the market with cheaper used vehicles and investing years of progress in the location, employment and investment.
Local automobile manufacturers say that the policy supported by the IMF risk the flood market with cheaper used vehicles; Fears that he will reverse ‘years of progress in the location, jobs and investment’
IMC urges the stability of politics
The CEO of Indus Motor Company (BMI), Ali Asghar Jamali, urged the government to avoid abrupt tariff changes and inconsistent political that, they said, threatens the viability of the automotive industry of Pakistan, which according to him is the largest 34th in the world.
This sector contributes four percent of total tax revenues, is among the main taxpayers in the collection of customs and sales taxes and maintains 2.5 million jobs, said Jamali. “With more than $ 5 billion invested, damaging this strategic industry risks the loss of income, unemployment and stagnant location. Stable long -term policies are essential for sustainable growth,” he said.
He suggested that industry volumes stabilize in 350,000 units annually to strengthen local supply chains. He also asked to maintain a balanced service differential up to 40 % between completely constructed units (CBU) and completely demolished units (ERC), and up to 25pc between raw materials and auto parts.
He also proposed to increase the 70 % financing limits of the vehicle with a period of seven years and gradually eliminating the imports of used cars encouraging local production and rationalization of the fiscal structure for fair competition.
‘Piece manufacturers are undermined’
Aamir Allawala, CEO of Tecno Auto Glass Limited and former president of the Association of Auto Parts and Accessories of Pakistan of Auto (PAAPAM), argued that auto parts manufacturers “need a volume and respect consistent of the government as the largest employment generator in the country.”
He criticized the growing market share of used vehicles, which is now 25 percent, saying that it has a coast of the indigenous suppliers base.
Allawala claimed that used car imports are widely known to involve black money, where transactions are often carried out through Hawala and sales made in cash without any trace of traceable money.
Even so, the Government continues to encourage it by allowing “ridiculously low fixed tasks” in used vehicles below 1,300cc while planning to increase sales tax in small local vehicles from 12.5pc to 18 percent, he lamented.
He said the industry needed the continuation of a policy that foster local manufacturing and helps increase volumes to 500,000 vehicles per year.
The steel industry seeks the road map
Malik Javed Iqbal, president of the Association of Great Pakistan Steel Producers (PALSP), asked the government to establish a consistent and harvest rates policy in consultation with interested parties.
“To encourage the production of steel through the iron ore will further increase the national steel industry, which has the ability to satisfy all the demand for steel now and in the future and can also opt for exports,” he said.
He said that the rebirth of steel and construction industries by the government can be promoted through a substantial increase in allocations in the public sector development program (PSDP) and an additional cut in the energy rate to make steel products prices affordable.
“The tariff reduction without guaranteeing regionally competitive costs of critical inputs such as power, gas, interest rates and taxes would invite the massive steel discharge from other countries, hitting the local industry even more,” he added.
Used car importers
On the other hand, the president of the Association of Engine Distributors of Pakistan (APMDA), HM Shehzad, expressed his optimism that the next budget would include provisions to increase the age limit for five -year used car imports and reduce import tariffs. He said that the government is also likely to allow the commercial import of used vehicles.
I hoped that these measures could reduce the prices of uses used by RS500,000 to RS1 million and guarantee the availability of these vehicles below RS2 million.
Mr. Shehzad said that a five-year-old car in Japan costs $ 3,000- $ 4,000 compared to $ 8,000 for a three-year vehicle, while a 660cc car gathered has a price higher than RS3 million. An increase in age reduction and age limit could boost annual imports of cars used from 30,000 to 70,000-80,000 units, generating additional income, he added.
Posted in Dawn, June 7, 2025
