Pakistan Auto Industry Urges Strong Policy Support to Boost Localization and Protect Jobs

Karachi — The local automobile industry has called on the government to introduce strong and consistent policy measures to strengthen domestic manufacturing, increase localization, and protect employment in the sector.

Speaking at a meeting held at the Korangi Association of Trade and Industry (KATI), Ghazanfar Ali Khan emphasized the urgent need for long-term policy stability and incentives for local production.

He urged authorities to push Chinese original equipment manufacturers (OEMs) operating in Pakistan to achieve at least 30% localization within three years, arguing that this would significantly boost the domestic auto parts industry and reduce reliance on imports.

He further stressed that vehicle models should remain unchanged for at least five years, allowing local vendors and suppliers to invest confidently in parts manufacturing without the risk of sudden design changes disrupting production cycles.

Ghazanfar Ali Khan also called for a ban on used vehicle imports, stating that such imports are harming the local industry and discouraging investment in domestic manufacturing capacity. He added that supporting local production requires eliminating HS codes for parts already manufactured in Pakistan to ensure imported alternatives are not undercutting domestic producers.

Highlighting structural concerns in taxation, he said auto parts are still being taxed based on weight rather than value, describing it as an outdated system that needs urgent reform. He recommended a shift toward a value-based taxation model to ensure fairness and modernization of the duty structure.

He also raised concerns over potential policy imbalance, noting that electric vehicles may be allowed at just 1% import duty while local manufacturers face significantly higher tax burdens. He warned that declining vehicle sales could lead to factory closures and rising unemployment across the automotive supply chain.

Calling for a cautious approach to market expansion, he suggested that approvals for new OEMs should be delayed until higher levels of localization are achieved by existing manufacturers.

Ghazanfar Ali Khan concluded that a strong domestic automotive industry is essential for Pakistan’s long-term economic growth, technology transfer, and job creation.

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