A delegation of Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) led by Chairman Engr Mumshad Ali, SVC Mashood Ali Khan, former chairman Mohammad Saleem, and MC member Saeed Khan met with Secretary Industries Khizar Hayat Gondal and apprised him about its reservations regarding new entrant status to MTW under the auto policy that expired on July 1, 2016.
The meeting was also attended by Additional Secretary, CEO EDB, from the government side. The PAAPAM leaders argued that the tractor industry was already performing under capacity due to frequent shifts in GST regime, erratic tractor subsidy schemes, and agri economy crisis. Besides that Belarus tractors had been assembled in Pakistan by Fecto Group and many of its parts were localized in the 80s, and technology in the country exists to produce these parts locally even then, and localisation level has gone to 95 per cent now from 40 per cent back in the 80s. Zero rated duty incentives on import of tractor parts for 3 years will be harmful for the local industry.
They argued that impact of RD on steel products was also increased the cost of raw materials for the APMs. In certain cases, the duty impact on steel raw material is up to 50 per cent, and this RD is against the cascading principal of duties in the auto policy which levies minimum duty on raw material. PAAPAM leaders also discussed the Auto policy and pleaded that with the import of used car under baggage, TR, and Gift schemes, chances of new entrant of car assembly coming into the country are next to none.
They proposed that the GST on small car be reduced as is the case in tractors, and age of used car be gradually reduced in order to increase car sales, and attract new investment by existing players in further localisation of hi-tech parts such as engine and transmissions. The delegation also apprised the secretary about the evaluation of tractor and motorcycle parts far below actual prices. The tractor parts being imported are evaluated at 1.5 USD per Kg where as the price of these parts should be around 7 USD per kg.
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