PAAPAM says concerned at National Tariff Policy
LAHORE: The Pakistan Association of Auto Parts Manufacturers (PAAPAM) has raised serious concerns over the government's newly announced National Tariff Policy 2025–30, warning that its implementation as currently envisioned could lead to the closure of a majority of local auto parts manufacturing firms.
The policy, which sets a 15% peak tariff, threatens to destabilize Pakistan's industrial sector by exposing domestic manufacturers to an influx of lower-cost imports.
PAAPAM Chairman Usman Aslam Malik emphasized that the auto parts industry has been a cornerstone of Pakistan's industrial development, supporting thousands of skilled workers and contributing significantly to economic stability. However, the abrupt tariff rationalization could result in the loss of up to 500,000 jobs, severely impacting livelihoods and weakening the country's manufacturing base.
The restrictive 0%–15% tariff spread leaves no room for a structured cascading tariff system, which is essential for balanced industrial growth. Additionally, high energy tariffs, inefficient labour markets, and complex taxation structures already make local production difficult, and the new policy could further hinder competitiveness.
PAAPAM also highlights the unfair global comparison, noting that China previously offered a 13% export rebate on certain products while Pakistan's duty drawback rate is 2%. This disparity places local manufacturers at a significant disadvantage in international markets, making it harder for them to compete globally.
Furthermore, rising imports due to lower tariffs may exacerbate foreign exchange challenges, putting further pressure on Pakistan's reserves.
The claim that trade liberalization alone can drive export growth is unrealistic unless the domestic market is strengthened to support sustainable industrial expansion. PAAPAM warns that, the envisioned tariff rationalization could lead to widespread factory shutdowns, crippling Pakistan's industrial backbone.
Given these concerns, PAAPAM strongly urges the government to retain the present tariff structure for one year and only implement revisions after thorough deliberation and consultation with all stakeholders. A carefully planned, phased approach would allow domestic industries to adapt while mitigating the risks posed by a sudden reduction in tariffs.
Implementing the revised tariff structure hastily would be disastrous for local manufacturing, forcing businesses into closures and jeopardizing thousands of jobs. Policymakers must ensure that any changes are introduced gradually, with comprehensive input from industry leaders and economic experts to avoid irreparable harm to Pakistan's industrial sector.
'Our industry has made significant strides in quality, innovation, and supply chain efficiency, yet these advancements risk being undone by the new tariff policy,' said Shehryar Qadir, Senior Vice Chairman of PAAPAM. 'We call for open dialogue with government stakeholders to craft a balanced strategy that supports industrial sustainability while maintaining competitiveness.'
PAAPAM remains committed to advocating for policies that foster sustainable growth, employment opportunities, and national economic resilience. The association looks forward to constructive engagement with policymakers to develop solutions that support Pakistan's auto parts industry and the broader industrial economy.
Copyright Business Recorder, 2025
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