At a time when the country is passing through one of the worst economic crises, an expected growth in the local auto industry is a welcome piece of news. Stakeholders claim that the local auto industry will produce around eight million vehicles in different categories annually by 2026. Additionally, the demand for vehicles is at an all-time high, rendering the automotive industry one of the fastest-growing investment avenues in the country. It can help decrease the growing import bill as many Pakistanis prefer to use costly imported vehicles despite imposition of huge duties and taxes.
Main factors for a substantial boost in the local auto industry is the implementation of government policy providing the much needed tax relief to local car makers while investment by several Chinese automakers is thriving in Pakistan. The entry of new-energy vehicle manufacturers from China is increasing the prospect of a strong local auto industry in Pakistan. The automobile industry is a key sector in Pakistan’s industrialization and modernization efforts. So far, Pakistani manufacturing industries have failed to increase the level of export, which is considerably low compared to the import of different items. This difference is leading to a hefty payments bill through the national exchequer. Paying for imports can strain the resources in Pakistan where economic growth lags and foreign exchange earnings are limited. In this situation, government needs to impose a short-term ban on the import of vehicles. At the same time, it needs to focus on improving the quality of locally made vehicles.
Government needs to introduce industrial friendly policies and provide a conducive environment to local and foreign investors to make investment in the auto industry. At the international level, government needs to engage experts for branding of its local vehicles to make them more acceptable. Surely, these measures will help decrease the existing trade deficit. The real way to maintain a balance is to increase local productivity and focus on providing tax relief on imported body parts which are essential for manufacturing quality vehicles in the country.
