KARACHI: The President of the Pakistan Businessmen and Intellectuals Forum, Mian Zahid Hussain, has raised concerns about the potential negative impacts of abrupt tariff reductions on imported vehicles, which could undermine local manufacturing and lead to increased deindustrialisation. He emphasized that while competition and affordable vehicles are vital for consumers, the long-term economic development of Pakistan should focus on localization, technology transfer, and exports rather than reliance on imported goods.

According to Pakistan Businessmen and Intellectuals Forum, recent data indicates a robust recovery in Pakistan's automobile market, with passenger-car sales growing by approximately 38.7 percent from the previous fiscal year. However, this recovery remains fragile as the industry operates below its installed capacity of approximately 500,000 vehicles. With around 45,000 completely built-up vehicles entering the country annually, accounting for nearly 18 percent of the domestic market, Hussain cautioned that lowering tariffs without boosting production volumes could make imported vehicles more appealing than local alternatives.

Hussain further highlighted the extensive network supported by the automobile industry, including parts manufacturers, engineering companies, and service providers, contributing approximately 2.8 percent to GDP and providing around 215,000 direct jobs. The Competition Commission of Pakistan has identified over 1,200 registered parts manufacturers, emphasizing the importance of these supply chains for domestic value addition and employment. Hussain warned that dismantling these supply chains would require years of investment and development to rebuild.

The issue of uncontrolled imports of used vehicles also poses a significant threat, with more than 38,000 used cars imported in FY2024-25, resulting in an estimated Rs60 billion in revenue losses and over 40,000 potential jobs forgone. Hussain clarified that the business community seeks not unlimited protection for inefficient manufacturers but rather temporary and transparent tariff differentials linked to localization, exports, and technological upgrading.

Hussain urged that assemblers receiving tariff advantages must publish localization levels, establish research and development facilities, and provide procurement opportunities to local parts manufacturers. He stressed the need for strict standards regarding vehicle quality, warranty coverage, and price transparency. The delay in finalizing the Automobile Industry Development and Export Policy 2026-31 has already affected investment decisions and industry expansion, he added.

Hussain concluded that a balanced automobile policy is essential to protect consumers from high prices and prevent premature deindustrialisation. Gradual tariff reductions should align with achieving scale, productivity, and export competitiveness in domestic manufacturing, transitioning Pakistan towards engineering, component manufacturing, and regional exports.