Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Pakistan Automotive Manufacturers Association (PAMA) has urged the government to restructure taxes on raw materials and parts to curb the cost of vehicles. A budget proposal to this effect was put forth to the council of ministries. Automakers have stated that raw material prices accelerating in the global price is taking a toll on the industry making it necessary for them to raise the price of the manufactured output.


The raw materials required to make automobiles comprise steel (57pc), iron (7pc), plastic (8pc), aluminum (8pc), and 20pc of other materials. According to PAMA,  prices for electro-galvanized, cold, and hot-rolled coil rose by 118pc, 119pc, and 161pc, respectively, from September 2020. There was a 58pc increase to $4.66/lb for copper in May from September 2020, while aluminum prices rose by 45pc.


The association has thus proposed the government alter additional customs duty (ACD) imposed on raw materials. It was raised from 1pc to 2pc vide SRO 630 (I) in 2018. These duties are alleged to have brought out unhealthy competition among the domestic automobile sector and do not align with the Automotive Development Policy 2016.


PAMA stated that the government enhanced per unit taxes on the industry by implementing FED and ACD on the raw materials to induce more revenue. But in the current times, they have requested the government levy concessionary duties on components. 

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