PAAPAM urges govt to take steps thru budget to ‘rescue’ auto parts industry

LAHORE: The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has urged the government to implement essential measures in the upcoming budget to rescue the struggling auto parts industry, which supports millions of families across the nation. In the Budget proposals, submitted to the government, PAAPAM emphasized the urgent need for government action in this regard.

PAAPAM Chairman Abdul Rehman Aizaz, Senior Vice Chairman Mumshad Ali, and Vice Chairman Taufiq Sherwani, stated that the PAAPAM has presented key budgetary recommendations to revitalize the industry, focusing on boosting exports and encouraging the localization of engineering activities, particularly within the auto parts sector. They highlighted the critical importance of conserving and earning foreign exchange to address the economic crisis, as well as the potential for job creation and economic growth through these initiatives.

To achieve these objectives, PAAPAM proposed several long-term suggestions, including a ten-year plan to support the adoption of electric vehicles (EVs) alongside localization efforts, shifting the import assessment of new auto parts from a weight-based to a unit-based custom tariff and ensuring that imported used auto parts are not reused for safety reasons.

The PAAPAM also stressed the need for a consistent AIDEP policy, under which all 13 assemblers are regulated, to enhance production volumes. They also emphasized the central role of the automobile industry, on which the aftermarket is dependent. The supply chain reaches the grassroots level interdependently.

PAAPAM leadership called for reduced duties, tax markups, and increased production to promote the leasing culture of cars in Pakistan. PAAPAM strongly advocated for the relaxation of certain duties on locally unavailable raw materials to reduce production costs. Additionally, they demanded the removal of federal excise duty on the automobile industry to help achieve economies of scale.

Former PAAPAM Chairman Syed Nabeel Hashmi criticized the import of used cars under flexible terms, noting that over 90% of locally produced models, including tractors and motorbikes, have achieved significant localization rates (over 95%).

He emphasized the importance of supporting local industries in integrating Pakistan into the global supply chain and called for rationalizing duties to regain regional competitiveness, which has been undermined by dollar escalation and high input costs. Hashmi also proposed a flat 5% sales tax on aftermarket parts production to stabilize the industry.

PAAPAM is committed to working closely with the government to implement these measures and ensure the sustainable growth and development of Pakistan’s auto parts industry. They stand ready to provide any necessary support and expertise to make these proposals a reality.

Copyright Business Recorder, 2024