ISLAMABAD: While automakers argue they are already overtaxed, the Ministry of Industries has countered that the sector has failed to meet past commitments made under various policy frameworks.
This was discussed at a high-level meeting chaired by Special Assistant to the Prime Minister on Revenue Haroon Akhtar Khan on Thursday. The meeting focused on tariff rationalisation and competitiveness in the country’s automotive sector.
Government officials floated a proposal to reduce import duties on Completely Built Units (CBUs), but automakers responded that vehicles assembled locally are already subjected to taxes as high as 56 percent.
Representatives of Indus Motors, Pakistan’s largest car assembler and manufacturer of Toyota vehicles, stated that their company alone creates around 4,000 jobs and sells over 120,000 vehicles annually.
However, auto parts manufacturers, represented by PAAPAM (Pakistan Association of Automotive Parts and Accessories Manufacturers), warned that reducing CBU import duties to 15 percent would severely harm the domestic parts and assembly industry.
At present, import duties on CBUs range from approximately 60 percent to as high as 197 percent, depending on vehicle category.
Government officials clarified that the proposed tariff rationalisation aims to encourage competition, increase consumer choice, and elevate quality standards within the domestic industry.
The meeting also addressed concerns over the industry’s limited performance on exports. Auto manufacturers were questioned on their inability to secure significant export orders despite decades of state protection. Separately, PAAPAM was told that public feedback indicates a perception that local auto parts are of inferior quality compared to imported components.
In response, Mr. Haroon Akhtar Khan asked both auto assemblers and parts manufacturers to submit detailed reports on the level of tariff protection they require by Saturday, May 24.
He assured stakeholders that their concerns would be presented to the Tariff Policy Board, adding that protection and incentives will be tied to measurable gains in productivity, innovation, and export growth.
The meeting was attended by senior officials from the Federal Board of Revenue (FBR), the Engineering Development Board (EDB), Ministry of Industries and Production Secretary Saif Anjum, and Secretary Commerce Jawad Paul, along with representatives from PAAPAM.
