Govt plans anti-dumping measures to protect local auto industry

The federal government has decided to introduce anti-dumping and tariff measures to protect local automobile manufacturing while gradually reducing duties on imported vehicles under the new auto policy, Business Recorder reported, citing officials and policy documents. 

According to the policy document, low-priced imported vehicles pose a threat to domestic manufacturing and around 2.5 million jobs linked to the auto sector. The government has therefore decided that tariff reductions on imported vehicles will be phased in cautiously rather than implemented at once.

Ministry of Industries and Production officials said tariffs on completely built units (CBUs) will be reduced gradually over five years, from 57–197% in 2024-25 towards 40–75% by 2030-31. The reductions will be linked to progress on localisation and reviewed at the end of each policy period.

The policy also maintains a 35% gap between CKD input costs and the localised CKD rate as a structural floor to ensure domestic assembly remains commercially more viable than direct imports.

Original equipment manufacturers importing parts at concessional rates will be required to meet localisation targets. Companies that fail to do so will face commercial-rate tariffs on an escalating share of CKO, preventing the use of import concessions without genuine domestic manufacturing.

The government has also decided to provide incentives to local electric vehicle and new energy vehicle producers while discouraging petrol and diesel vehicles. A proposal is under consideration to impose a carbon levy of 10–19.5pc on petrol and diesel vehicles above 1,000cc.

A special committee has been constituted to deliberate further on the proposed carbon levy. Sources said the levy could generate up to Rs142 billion over the next five years if imposed.

For new energy vehicle four-wheelers, including cars and SUVs, the CBU tariff will be maintained at 50% in 2026-27 and gradually reduced to 40% by 2030-31. Officials said this is meant to prevent the prioritised NEV segment from becoming a route for cheap CBU imports at the expense of local assembly.

The policy states that no new blanket concessions will be granted on CBUs. The existing ad hoc 25pc customs duty concession on electric vehicle CBUs has also been discontinued.

CBU imports at concessional rates for the L7 category will be capped at 100 units per variant per company until June 2027. This facility will only be available to manufacturers that subsequently localise production in Pakistan, rather than businesses engaged only in imports.

Companies engaged solely in import business will be required to pay the full commercial tariff. Concessional import facilities will be limited to genuine manufacturers.

The policy also proposes strict action against the practice of importing auto parts by declaring them as scrap to evade customs duties. The document says this practice has allowed cheap foreign parts to enter the market and undercut domestic manufacturers.

The Federal Board of Revenue has been directed to review valuation rulings for imported vehicles and parts to curb under-invoicing and strengthen tariff enforcement.

The policy document notes that major automotive-producing countries, including China and the United States, also maintain protective tariffs on imports.

The government also plans to establish an auto testing and safety system in line with international standards. Pakistan has already notified 62 automotive standards aligned with WP-29, with plans to set up domestic testing facilities for safety, emissions and technical standards.

Under the policy, only companies that localise production in Pakistan will be eligible for incentives and concessional benefits.