The government has estimated the auto industry needs to invest Rs 60 billion for capacity expansion in the next five years to meet growing demand, Business Recorder learnt on Friday.
Official sources said although efforts are being made to bring in European car manufacturers to Pakistan, local investment is crucial for sustainable growth of the industry for which talks are under way with the automobile sector representatives. The government has estimated the industry needs to inject Rs 21.63 billion in 2006-07 for the production of 248,000 cars/light commercial vehicles (LCVs), which has to be raised regularly every year.
The industry would be required to enhance investment from Rs 21.63 billion in 2006-07 to Rs 25.68 billion in 2007-08 for the production capacity of 276,000.
Likewise, for 2008-09, the industry has to inject Rs 14 billion in 2008-09; Rs 11 billion in 2009-10; Rs 4.50 billion in 2010-11; and Rs 5.20 billion in 2011-12 for incremental car production capacity from 348,000 to 516,000 units. The government has projected 0.5 million domestic demand of cars by 2010-11.
A committee headed by planning commission deputy chairman Dr Akram Sheikh has been holding talks with all stakeholders to develop a consensus on a long-term plan for meeting production targets. Other members of the committee included industries secretary Kamran Rasool and Central Board of Revenue chairman Abdullah Yousaf.
Total production of cars by local industry till May 2006, stands at 143,921, while the production of LCVs is 25,800; trucks 4,620; buses 744; tractors 43,776; and motorcycles 677,838.
Increasing demand of cars in the local market left the government with no other option but to allow import of used cars, which became one of the major issues between the government and the local auto industry. Sources said consensus between the government and the auto sector would pave the way for a progressive and dynamic industry as a three-year transition phase focussing on capacity expansion and competitive production, encouraging further localisation, global integration, incentivising technology acquisition and encouraging foreign direct investment was being worked out.
Besides, a two-year plan to put in place a vending industry to help in enhancing value-added production to become regional hub and grab share in the world market.
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