Pakistan has no auto localization targets, National Assembly told

Islamabad: Pakistan currently has no separate localization targets for vehicle manufacturers, while the level of local parts used in vehicles varies sharply from 30 percent to 94 percent across major categories, according to a reply submitted to the National Assembly.

The figures show that motorcycles have the highest estimated local content, with up to 94 percent localization for motorcycles up to 100cc. Tractors in the 40 horsepower to 55 horsepower category have 90 percent localization, while larger passenger cars above 1300cc have only 43 percent local content.

The information was provided by the Ministry of Industries and Production in response to a question raised by MNA Syed Rafiullah during the 29th session of the National Assembly.

The official reply also revealed that the Engineering Development Board does not maintain yearly figures for foreign exchange spent on imported completely knocked-down kits, components and parts over the last five years. The ministry said this information is maintained by the Federal Board of Revenue and can be obtained from the FBR.

The absence of a separate localization target means manufacturers are currently not working under a specific official percentage target set by the ministry. The government said the proposed Automotive and Auto Parts Manufacturing Policy 2026 to 2031 would introduce localization targets and performance benchmarks after approval.

Under the existing system, the government promotes the use of locally made parts through an Additional Customs Duty of 16 percent on localized parts for four-wheelers and 31 percent on localized parts for two and three-wheelers.

The list of localized parts is issued under SRO 693(I)/2006 and is updated twice a year based on the recommendations of the Engineering Development Board.

The proposed new policy is expected to focus on increasing local production, strengthening the local vendor industry, promoting technology transfer, improving quality standards and reducing dependence on imported components.

The current figures show major differences between vehicle categories. Passenger cars up to 800cc have an estimated 70 percent localization, while cars above 800cc and up to 1300cc have 58 percent. Cars above 1300cc have 43 percent.

Among commercial vehicles, pickups up to two tons have 65 percent localization, while pickups above 1500cc have 50 percent. Commercial vehicles with gross vehicle weight above two tons and up to five tons have 30 percent localization.

Rigid trucks and truck tractors also have an estimated 30 percent localization, while buses have 30 percent and SUVs have 40 percent.

Motorcycles above 100cc and up to 175cc have 83 percent localization.

The ministry said localization is currently monitored through the list of locally produced parts, which is reviewed and updated based on technical assessment by the Engineering Development Board.

A more detailed monitoring and verification system is proposed under the new auto policy. However, this system will only be implemented after the policy is approved by the competent forum.