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ISLAMABAD: Pakistan will gradually cut tariffs on the auto sector over the next five years and work on a strategy to expand exports, Commerce Minister Jam Kamal Khan told industry representatives on Wednesday, as the government seeks to strengthen the local market and boost overseas sales.

Khan met auto industry stakeholders in Islamabad and announced the formation of a committee, comprising officials from the Commerce Ministry, the Federal Board of Revenue and the Ministry of Industries, to address sector challenges. The minister invited the industry to participate in the upcoming industrial policy and said healthy competition was increasing in Pakistan’s auto market.

“After tractors and motorcycles, we will now also export cars,” Khan said, adding that the government would prepare “a strategy for the development and exports of the auto sector” and that tariffs “will be gradually reduced over the next five years.”

Khan said imported used cars should meet quality and environment-friendly standards and linked new export prospects to a recently signed US tariff reduction agreement. Under the deal, Washington has cut import duties on Pakistani goods to 19 percent, a move the government says will improve competitiveness for products including automobiles. 

“The tariff reduction agreement with the US has created new opportunities for auto exports,” the minister said.

Industry representatives told the meeting that new technologies had increased production costs, and urged protection for local manufacturers from the import of used vehicles.

Pakistan’s automobile industry is one of the fastest-growing sectors, contributing around 7 percent of Large Scale Manufacturing (LSM) and accounting for 7–16 percent of the manufacturing GDP depending on the metric used. It employs millions, and local assembly is dominated by established players like Honda, Toyota, Suzuki, Hyundai, Kia, and newcomers such as MG and Haval.

The market includes motorcycles, tractors, cars, and commercial vehicles, but remains highly concentrated among a few brands.

The fiscal year 2025–26 budget introduced several changes impacting the auto industry. A new Green Tax was applied to internal combustion engine vehicles, ranging from 1 percent to 3 percent of vehicle value depending on engine size and origin .

The industry also flagged an imbalance in GST rates — 8.5 percent on hybrid electric vehicles versus 18 percent on fully electric vehicles — raising concerns over a policy disconnect with the Automotive Industry Development and Export Policy (AIDEP) 2021–2026 provisions.

Experts warn that high taxes, policy uncertainty, and weak industrial support were curbing demand. Recent vehicle sales dropped 49 percent month-on‑month in July 2025, partly due to pre-budget rushes and subsequent tax adjustments  .

The sector also faces structural challenges including limited localization of parts, high production costs, and fragile capacity utilization (around 24 percent). Policy instability, particularly regarding tariff reductions and fiscal incentives, risks discouraging investment, and experts say long-term industrial support is necessary to prevent local manufacturing decline.

Inflation, currency volatility, and macroeconomic uncertainty further weigh on consumer demand and financing.

WASHINGTON: The US government noted abuses in India and Pakistan in a shortened human rights report released on Tuesday that said India “took minimal credible steps” to combat the abuses while Pakistan “rarely took credible steps.”

The Trump administration scaled back the annual US government report on human rights worldwide, dramatically softening criticism of some allies and countries that have been President Donald Trump’s partners.

The State Department human rights documentation for India and Pakistan was also much shorter and scaled back this year.
India has been an important US partner in recent years in Washington’s effort to counter China’s rise, although relations have been tense over Trump’s imposition of a 50 percent tariff on goods from India. Pakistan is a non-NATO US ally.

About India, the report said: “The government took minimal credible steps or action to identify and punish officials who committed human rights abuses.”

On Pakistan, it added: “The government rarely took credible steps to identify and punish officials who committed human rights abuses.”

Indian and Pakistani embassies in Washington had no immediate comment on the report released on Tuesday, which documented instances in 2024.

Amnesty International and Human Rights Watch fault Indian Prime Minister Narendra Modi’s government for its treatment of minorities.

They point to rising hate speeches, a religion-based citizenship law the UN calls “fundamentally discriminatory,” anti-conversion legislation that challenges freedom of belief, the 2019 removal of Muslim-majority Kashmir’s special status, and the demolition of properties owned by Muslims.

Modi denies discrimination and says his policies, such as food subsidy programs and electrification drives, benefit everyone.
In Pakistan, Amnesty International says government authorities fail to protect minorities, including Christians, and use “excessive and unnecessary force” against civil society voices and protesters.

In particular, rights groups, the UN, and Western governments raised concerns over the 2024 Pakistani elections. A UN working group said last year that former Prime Minister Imran Khan’s detention violated international law. Khan remains in jail.

Islamabad says its elections were fair and dismisses allegations of rigging and foul play.

Washington and New Delhi have not reached a trade deal, while the United States has reached an agreement in recent weeks with Pakistan.

Trump angered India by taking credit for an India-Pakistan ceasefire in May after hostilities between the neighbors following an April attack in India-administered Kashmir. India says New Delhi and Islamabad should resolve their ties directly without outside involvement.