The government has offered the automobile industry an eight-year pre-announced tariff policy, including establishment of a fund worth Rs 6 billion for competitiveness, technology acquisition, research and development and two auto clusters in its plan to develop the sector on sustainable footings, sources told Business Recorder on Monday.
Informed sources said the non-tariff policy incentives included productive investment incentives, an auto industry development committee, establishment of funds for the auto industry competitiveness, research and development, technology acquisition and a policy that has incentives for export.
The pre-announced eight-year tariff policy for the CKD and CBU proposes constant duty structure for the first three years followed by a variable duty structure for the next five years depending on the engine power of cars to enable OEMs and vendors to make long-term investment.
It is also proposed the two auto industry clusters-one in Karachi and other in Lahore-would be established to enhance inter-firm co-operation and encourage innovation and specialisation in the production and supply chain.
Moreover, the proposed plan also offers Rs 6 billion fund on matching grants for the industry's competitiveness, research and development, and technology acquisition (TAF).
It is also proposed that government technical institutes should be attached with the automobile companies for practical training, similar to "house job concept" in medical profession.
It is also proposed the government may waive the tax liability on the cost of training, which will be based on quality and the number of persons trained by these institutes.
To take care of the road quality and safety standards, a Motor Vehicle Act, jointly managed by the private or private-public management, is also proposed. Similarly, the government will announce Emission Control Regulation that offers tax incentives for car manufacturers for producing hybrid vehicles or those operating with non-hydrocarbon fuels.
It includes a matching fuel policy (sulphur, benzene and lead-free fuel) along-with physical infrastructure and to encourage the use of catalytic converters.
The programme has been prepared keeping in view shortage of vehicles and also setting a year-wise target in 2006-07 for the production of 248,000 cars/light commercial vehicles (LCVs) and raise it to 276,000 units in 2007-08.
The target for 2008-09 is 348,000 units and for 2009-10, it is envisaged that the industry needs to enhance it production capacity to 413,000 cars. Similarly, the production target for 2010-11 and 2011-12 is set at 503,000 and 516,000 cars, respectively.
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