PAMA seeks PM's intervention to protect auto industry from tariff cuts

August 05, 2026 (MLN):  The Pakistan Automotive Manufacturers Association (PAMA) has sought the prime minister's immediate intervention to protect the domestic automotive manufacturing industry from what it termed a serious risk of deindustrialization, arising from the proposed reduction in Completely Built Unit (CBU) import tariffs under the National Tariff Policy 2026–31 (NTP 2026–31).

In a letter addressed to Prime Minister Shehbaz Sharif, PAMA stated that the industry, one of the largest CKD vehicle producers, comprises 31 vehicle brands and over 100 models, and has attracted more than US$5bn in investment by OEMs and auto parts manufacturers over the past three automotive policies.

The passenger car segment contributes more than Rs700bn to national tax revenues and supports the livelihoods of nearly 2.5mn Pakistanis, the letter noted, adding that the industry is currently operating at below 50% of its installed annual capacity of 500,000 units, largely due to repeated policy changes and demand-suppressing measures.

PAMA further pointed out that the annual import of approximately 45,000 CBU vehicles diverts nearly 18% of the domestic market away from local manufacturers.

The association termed the proposed reduction of CBU tariffs to 15% under the NTP 2026–31 as based on unrealistic assumptions regarding exports and competitiveness, cautioning that instead of promoting industrial growth, the move would accelerate deindustrialization by making imported vehicles significantly more competitive than locally manufactured ones.

Citing international practice, PAMA noted that major automotive manufacturing countries continue to protect their domestic industries through calibrated tariff regimes, with Vietnam maintaining tariffs of up to 70% and Thailand applying tariffs of up to 80% on imported vehicles.

The association warned that if the automotive sector is not excluded from the proposed tariff reductions, the industry foresees permanent closure of vehicle manufacturing plants and around 1,324 auto parts manufacturers, a loss of more than US$5bn in industrial investment, and direct unemployment affecting the livelihoods of approximately 2.5mn people.

In view of these concerns, PAMA urged the government to exclude the automotive sector from the proposed tariff reductions under the NTP 2026–31, introduce a stable, long-term automotive policy framework to ensure predictable tariff structures, and maintain a minimum 40% tariff differential between CBU imports and locally manufactured vehicles to facilitate sustainable production volumes, investment, and deep localization.

The association maintained that government support is essential to safeguard one of Pakistan's largest manufacturing industries, preserve employment, encourage future investment, and strengthen the country's industrial and economic resilience.

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