Tariff disparity threatens auto assembly

KARACHI: Pakistan’s automotive industry has raised concerns over a critical issue caused by the Finance Act 2026-27, as the new tariff structure now makes importing a fully assembled vehicle more economical than manufacturing one domestically.

In an urgent appeal to the prime minister, the Pakistan Automotive Manufacturers Association (PAMA) — representing 16 assemblers producing over 100 vehicle models under 31 international brands — has requested immediate intervention, warning that the anomaly threatens to reverse decades of industrial progress.

Under the new tariff regime, imports of completely built units (CBUs) below 800cc would attract a minimum customs duty of just 30 per cent, and commercially imported parts at 25pc. Yet completely knocked down (CKD) kits — the very inputs used by local assembly plants — carry 32pc (30pc customs duty plus a 2pc additional duty), while localised parts face duties of up to 46pc.

The structure actively rewards imports and penalises localisation, domestic value addition and technology transfer — the very objectives every automotive policy of the past three decades has sought to advance.

The anomaly has landed at the worst possible moment. With the future Auto Industry Policy still undecided, manufacturers have no visibility on the tariff and regulatory framework under which they will operate. Business planning........

© Dawn Business