Automobile Industries in Pakistan will Face the New Challenges in the Post WTO Scenario

Dr. M. Shahid Khalil & Dr. Shahab Alam

Year:    2004
Category:   WTO
Source:   ICQI 2004 – Pakistan 8th International Convention on Quality Improvement, Lahore
Publisher:   PIQC Institute of Quality

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Author’ Introduction:   

Dr. Muhammad Shahid Khalil has completed his Ph.D in Mechanical Engineering in 1987 from Shaffield University, Shaffield, United Kingdom (UK). His specialization area is in Computer Aided Design (CAD) and Computer Aided Engineering (CAE). He is currently teaching in University of Engineering & Technology, Taxila.


The objective of the WTO regime is to create environment by removing Tariff and Non-Tariff barriers in the International Trade. Only competitive producers and manufacturers are likely to survive in the open market. The countries, which initiated WTO, are well prepared to reap the fruits of the upcoming era. While, on the other hand, majority of the developing countries are not in a position to compete with the developed countries. By one way or the other, economically or politically, the developed countries will have control over the developing countries and Pakistan is no exception.

The importance of Auto Industry to our economy can hardly be over emphasized. There are eighteen Automobile units in assembling business in the country. These units are well supported by over 850 supplier/ vendor of Auto spare parts. The Auto Industry and downstream vendor industry employs more than 150,000 people. It has also saved billions in import substitution. In the fiscal year 2002-03, the Auto industry has registered a positive growth in its sales of trucks as high as 103% compared to previous year. The current sales bonanza experienced by Automobile Industry is the result of consistently rising demand by customers. This market is also fueled by falling interest rates, upsurge in foreign remittances and easy availability of car financing and the introduction of new Automobile Models.

The Automobile Industry is a highly protected industry. The duties levied on used cars go as high as 200 percent. Automobile assemblers have not yet been able to provide vehicles at affordable prices to the customer.  Pakistan inked WTO in 1995 and it will come into operation on 1st January, 2005. No Tariff regime of WTO will get a huge influx of imported cars that will test real mettle of the industry. The Federal Commerce Minister has been reported saying that government is planning to lower Tariff protection in Automobile Industry in response to objections raised by European Union and IMF over higher protection being enjoyed Automobile assemblers in Pakistan. In the given situation, it may not be wrong to prophase that this protection will not long last. In the year 2005, when WTO comes into effect, all such Tariffs will be scrapped. This paper will do an in-depth analysis of our Automobile Industry from the perspective of WTO and make recommendations that the industry may require developing and preparing itself for no Tariff future, which is just Six Months away.