PAAPAM urges govt to expedite Auto Policy, delay eroding investor confidence

August 05, 2026 (MLN):  The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has urged the government to expedite finalization of the new Auto Policy without further delay, cautioning that continued policy ambiguity is eroding investor confidence and pushing capital toward more predictable markets, while calling for a vendor-focused, localization-driven framework in place of the assembly-centric approach of the previous two policies.

PAAPAM raised these concerns in a letter addressed to the Prime Minister.

The association held that the prolonged delay in finalizing the Auto Policy has created significant uncertainty for its members, with investment decisions, capacity planning and technology upgradation across the vendor industry remaining stalled in the absence of policy clarity.

PAAPAM placed on record that the previous two Auto Policies were largely assembly-centric in design, with their incentive structures primarily benefiting assembly operations and resulting in a proliferation of assembly plants rather than genuine industrial deepening.

It noted that the vendor sector, which accounts for approximately 80% of total employment generated by the auto industry, received little to no meaningful support under these frameworks.

The association maintained that a truly sustainable auto sector must be built on deepening localization, strengthening the vendor base, encouraging technology transfer and enabling economies of scale for parts manufacturers, adding that the forthcoming Auto Policy must correct this course and place vendor development and localization at its core.

In light of these concerns, PAAPAM made two requests: a meeting with the Prime Minister to present its vision and recommendations for building a competitive auto sector anchored in deeper localization and a robust vendor industry, and an opportunity to engage in a substantive debate on the National Tariff Policy and its impact on the auto sector with the relevant team of economists led by Stefan Dercon, so that the vendor industry's perspective is fully reflected in tariff-related policy decisions affecting local manufacturing.

The association reaffirmed its commitment to working closely with the government to develop a policy framework that promotes genuine industrialization, import substitution and sustainable employment generation in Pakistan's auto sector, seeking an early opportunity to present its views in person.

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