U.S. tariff reductions provide fresh opportunities for Pakistan's automotive industry, according to Kamal's statements
Pakistan Forms High-Level Committee to Boost Auto Industry
The Pakistani government has taken a significant step towards bolstering its auto industry by forming a high-level committee, comprising representatives from the Ministry of Commerce, Federal Board of Revenue (FBR), and the Ministry of Industries and Production. The aim is to address challenges within the sector and develop a comprehensive industrial policy that encourages healthy competition and increased export activity.
The committee's mandate includes strengthening the auto industry, resolving issues such as the impact of old vehicle imports and production cost increases due to new technology, and enhancing exports, particularly leveraging the new opportunity created by the recent US tariff reduction agreement.
The US trade deal has reduced reciprocal tariffs on Pakistani goods from 29% to 19%, offering a significant competitive advantage. This reduced tariff rate, the lowest in the region, presents a major opportunity to boost Pakistan's exports to the United States, potentially including cars, after the successful export of tractors and motorcycles.
The policy also aims to tackle challenges like limited localization of parts, high production costs, and low capacity utilization (around 24%). To ensure the industry's growth and competitiveness, the government encourages industry participation in the policy process and emphasizes environmental and quality standards for imported used vehicles.
Minister of Commerce, Jam Kamal Khan, announced plans to gradually reduce tariffs on the auto sector over the next five years. He also invited the auto industry to join the new industrial policy and expressed that healthy competition is increasing in the Pakistani auto market.
Industrialists in Pakistan have urged the government to protect the local auto sector from importing old vehicles. The government's response is to formulate a strategy for the development and exports of the Pakistani auto sector, which will be prepared by this high-level committee.
This coordinated government approach reflects a commitment to bolster the industry's sustainability, competitiveness, and export potential in the medium term. The minister's announcement is a positive step towards a more robust and competitive Pakistani auto sector.
- The government-formed committee, tasked with boosting the auto industry, will also focus on enhancing sports vehicle exports, given the potential in the newly reduced US tariffs and the successful export of motorcycles.
- To ensure the auto industry's growth, the government's strategy for the development and exports of the Pakistani auto sector, prepared by the high-level committee, will also address the index of sports vehicle production and competitiveness within the sector.
