Duty to be raised on auto parts being made locally

The government is likely to increase customs duty to 50 percent from 35 percent on auto parts which are being made locally but imported by the car manufacturers. However, tariff for commercial importers and on parts not manufactured locally will be 35 percent.
The duty on import of CKD kits is also expected to be revised downward to 32.5 percent from 35 percent. Sources in Engineering Development Board (EDB) told Business Recorder that since the deletion programme was being replaced with Tariff-Based System (TBS), the new duty slabs would be based on capacity of the vehicles.
"The new tariff slabs will vary from 10 to 50 percent for both the locally manufactured and the imported parts of motorcycles, and small and big cars," they said.
They said that TBS had been finalised after threadbare deliberations between the public and private sector stakeholders except the Commerce Ministry. They added that EDB had dispatched the revised tariff to CBR two days back.
Sources said that the new tariff proposals had been finalised on Saturday at a meeting between the EDB and CBR officials, which would be announced in the 2006-07 budget on Monday.
They said that the purpose to levy high duty on import of those parts which are being manufactured locally is to protect the local industry. The EDB has also proposed low tariff on parts which are not manufactured by local industry to ensure their availability in the market.
Under the tariff-based system manufacturers would be free to import any particular parts by paying high duty. The steps, sources said, have been suggested not just to comply with the World Trade Organisation (WTO) requirements but also for protection and promotion of the local automobile industry.
In reply to a question, sources said that switching from deletion programme to TBS would not have any negative impact on local vendor industry, which is contributing its share reasonably.
Chinese investment in the motorcycle sector, they said, has boosted the sector and enabled the country to export a large number of motorbikes being manufactured in the country.
They said that Honda Company has also expressed its desire to manufacture motorbikes in Pakistan for export purpose. They said there would be no change in auto import policy despite the outcry of local auto industry.