Auto parts makers decry new tariff policy
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The Pakistan Association of Auto Parts Manufacturers (PAAPAM) has raised serious concerns over the government's newly announced National Tariff Policy 202530, warning that its implementation could result in the closure of a majority of local auto parts manufacturing firms. The policy, which sets a 15% peak tariff, risks destabilising Pakistan's industrial sector by exposing domestic manufacturers to a flood of low-cost imports.
According to a statement, PAAPAM Chairman Usman Aslam Malik stressed that the auto parts industry has long supported industrial development, employing thousands of skilled workers and contributing to economic stability. However, the abrupt tariff rationalisation may cause the loss of up to 500,000 jobs, severely impacting livelihoods and weakening the country's manufacturing base. The narrow 0%-15% tariff spread allows no room for a cascading tariff structurecrucial for balanced growth. Coupled with high energy tariffs, inefficient labour markets, and complex taxation, the new policy may further erode competitiveness.
PAAPAM also criticised unfair global comparisons, noting that China provided a 13% export rebate on certain products, while Pakistan's duty drawback rate stands at just 2%. This disparity hampers global competitiveness.
Moreover, rising imports due to reduced tariffs may worsen foreign exchange reserves. PAAPAM argues that liberalised trade cannot spur exports unless the domestic market is robust enough to support sustainable expansion.
Given these issues, PAAPAM urged the government to retain the existing tariff structure for one year and adopt any changes only after thorough consultation with stakeholders. A gradual, phased approach would help industries adjust while minimising the risks of sudden tariff cuts.
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PAAPAM concerned at proposed National Tariff Policy 2025-30
LAHORE: The Pakistan Association of Auto Parts Manufacturers (PAAPAM) convened an extraordinary general meeting to discuss the government's proposed National Tariff Policy 2025–30. Members expressed grave concerns over the policy's anticipated negative impact on the auto parts manufacturing sector, warning that its implementation could lead to widespread industry closures and severe job losses. The PAAPAM leadership briefed members on a series of meetings held with the Ministry of Industries and Production (MOIP) and the Engineering Development Board (EDB) to highlight the damaging effects of the tariff rationalisation. The members condemned the unilateral acceptance of recommendations from IMF Consultants, reiterating that such a move fails to account for the fundamental role of the auto parts sector in supplying components to Pakistan's local OEMs—supporting the production of cars, tractors, motorcycles, trucks, buses, and defense/railway equipment. Industry stakeholders emphasised that the proposed tariff reduction would shift Pakistan's economy towards imports rather than local industrialization, deepening reliance on foreign products and depleting the country's already limited foreign exchange reserves. They warned that this policy threatens economic stability, as the financial resources needed for industrial growth will instead be drained by excessive imports. Furthermore, the PAAPAM members highlighted that the auto parts industry serves as a critical training ground for human resource development, equipping skilled workers with engineering and industrial expertise. These trained professionals often secure overseas employment, contributing to national remittances and global workforce competitiveness. The closure of domestic industries due to the tariff change would effectively halt this human resource development pipeline, leading to a shortage of skilled labor and restricting opportunities for Pakistan's workforce in international markets. 'We urged the government to adopt a strategic and structured approach to tariff adjustments instead of implementing abrupt changes that destabilize the industry,' said PAAPAM Chairman Usman Aslam Malik. 'The livelihoods of thousands of skilled workers and the long-term sustainability of Pakistan's industrial sector depend on a policy that nurtures local manufacturing rather than exposing it to unfair competition from imports.' Echoing this sentiment, PAAPAM Senior Vice Chairman Shehryar Qadir emphasised the critical need for an inclusive and well-informed policy framework. 'Pakistan's auto parts industry has worked tirelessly to enhance quality, innovation, and efficiency,' he stated. 'A sudden tariff reduction would undo decades of progress and place local manufacturers at an unfair disadvantage against international suppliers. The government must prioritize industrial sustainability through policies that foster growth rather than hinder it.' The PAAPAM remains committed to constructive engagement with policymakers to ensure an industrial framework that supports local manufacturers, preserves jobs, and strengthens Pakistan's economic resilience. The association calls for establishing a balanced and sustainable tariff structure after consultation with industry stakeholders. Copyright Business Recorder, 2025
