PIDE urges structural changes to Pakistan’s proposed Automobile Policy 2026-2031, with stakeholders calling for tariff stability, stronger technology transfer, vendor development and export growth.
ISLAMABAD: Pakistan’s automobile industry could be heading towards a major policy reset as the Pakistan Institute of Development Economics (PIDE) has called for structural reforms under the proposed Automobile Policy 2026-2031.
At a stakeholder roundtable hosted by PIDE, policymakers, industry leaders and academics discussed how the next five-year policy could address long-standing weaknesses in the automobile sector, including high tariffs, limited technology transfer, weak vendor development and insufficient export growth.
The discussion was based on PIDE’s joint Policy Viewpoint, “Shifting Gears: Shaping Pakistan’s Next Automobile Policy”, prepared by its Center for Industry, Commerce and Digital Economy (CICDE) and Center for Governance, Markets and Regulatory Analysis (CGMRA).
PIDE calls for stronger automobile industry
PIDE said Pakistan’s automobile sector had developed a substantial industrial base over the past two decades, with production capacity exceeding 500,000 units and more than 15 assemblers currently operating in the market.
However, the institute noted that increased capacity had not translated into comparable gains in production volumes, vehicle affordability or the development of a competitive local vendor industry.
Dr Usman Qadir, Senior Research Economist and Director of CICDE, said the forthcoming policy presented an opportunity to rethink how the sector operates.
He advocated a shift towards a retail sales model, clearer technology-transfer requirements to strengthen local vendors and government incentives linked to measurable performance.
Tariff policy emerges as key concern
Tariff policy was among the central issues discussed during the consultation.
Industry representatives called for a predictable and business-friendly tariff structure, arguing that frequent policy changes had made long-term investment decisions difficult.
They also urged greater consistency across successive governments and trade agreements that would support the sector’s ability to expand exports.
Aamir Allawala, CEO of Tecno Auto Glass Limited and former President of PAAPAM, said high taxation, security-related challenges and the anti-export bias of the existing policy framework were among the major barriers holding back the industry’s growth.
Dr Robina Ather, former Chairperson of the National Tariff Commission, said the National Tariff Policy 2025-2030 was intended to rationalise import tariffs across the economy.
However, she cautioned that applying tariff reforms to the automobile sector would require careful sequencing to avoid disruptive adjustments.
According to Ather, tariffs were an important component of the forthcoming automobile policy, but could not be treated as the sector’s only challenge.
She said the new policy must also tackle wider structural constraints preventing Pakistan’s automobile industry from becoming more competitive.
Industry calls for greater transparency
Participants also called for a more transparent policy-making process, urging the government to publish the proposed policy’s objectives and key provisions for public consultation before final approval.
Hasan Mian, CEO of YES Electromotive, described the PIDE roundtable as one of the most productive consultations on the future of Pakistan’s automobile industry.
The meeting was opened by Dr Shahzada Naeem Nawaz, Professor of Economics and Director of PIDE’s Macro Policy Lab, while Mohammad Shaaf Najib, Research Economist at CGMRA, moderated the discussion.
The consultation brought together government officials, industry representatives and academics to develop a common understanding of the challenges facing the sector.
Automobile Policy 2026-2031 could reshape sector
With the Automobile Policy 2026-2031 now taking shape, stakeholders believe the government has an opportunity to move beyond short-term protection and incentives towards a framework based on competitiveness, technology, exports and measurable industry performance.
The success of the new policy, however, will depend not only on the incentives it offers but also on whether it can provide businesses with the policy stability and market conditions needed for long-term investment.
Stakeholders argue that predictable tariffs, stronger technology transfer, improved vendor development and greater export orientation will be critical if Pakistan’s automobile industry is to become more competitive and move beyond a predominantly domestic-market focus.