The new government has been urged not to repeat past mistakes by allowing import of hybrid cars on zero duty rate as the scheme will only benefit a few and have a devastating impact on national exchequer. Criticising the advice to the Federal Government to allow duty free import of hybrid cars to save on fuel bill, stakeholders said that the government will lose big time as the auto import bill will surpass the possible saving on fuel import bill as people with purchasing power will import heavy luxury vehicles running on hybrid technology.
"In yet another attempt after the age limit issue and legalising of smuggled vehicles, the government is again thinking of halting the growth prospects of local auto industry through allowing duty free import of hybrid vehicles. In our view the government should once and for all decide whether it wants the local auto industry to grow or does it want mass unemployment of the people associated with this sector. Yes allowing imports make sense in the short-term but ultimately it will have a negative impact in the long run," said Taha Khan Javed, Head of Research, Taurus Securities.
"The government should ultimately stick to one policy and encourage FDI/new investment in the auto sector which will increase localisation rate, rather than allowing imported cars to come in the country which pay insignificant taxes compared to local assemblers," he added.
Previous such initiatives taken by PPP regime, especially tax amnesty on smuggled or illegally imported vehicles, only proved hollowness of the tax and revenue systems instead of bringing any long-term benefits. Country had lost 15 billion rupees in amnesty scandal. If those 51,000 vehicles were assembled in the country, regular taxes/revenues on an average would have crossed Rs 25 billion while amnesty scheme only added Rs 10 billion to the national kitty, stakeholders said.
"Such short-term approaches always provide multimillion dollar benefit to some segments who originate such schemes leaving a depressing impact on honest taxpayers and law abiding citizens," they claimed. They said that instead of allowing concessions on import of CBU, government should emphasise on transfer of hybrid technology to generate investment and job opportunities in the country.
"Hybrids can bring down fuel expenditure as it will cost Rs 4-6 /KM but in fact the most economical hybrid vehicle costs over US $20,000. Imagine our oil import bill going down by just Rs 1 billion and vehicle import bill going up by Rs 10 billion on a meagre import of 5,000 units; it would be a disaster for our balance of payments," said an expert. "The proposed duty free import of hybrid vehicles will not only create balance of payment issue but will also eliminate the local engineering base (vending industry) as CBU import will completely wipe out the need of local parts for assembling these vehicles while the hybrid will most likely take away a major chunk of market share," he added.
Policy- makers seem to have fake notion about the fuel savings part and very conveniently ignoring the impact on import bill in importing expensive CBU vehicles while our weak currency might not be able to sustain the influx of luxury hybrid vehicles. Such policies are not wise and will have a long term devastating impact on country's economy, stakeholders said adding that severity of the situation could be gauged from the fact that mafias in used cars business have already started buying and stocking used hybrid vehicles in Japan, whereas the government has not clarified its intentions whether it will allow used hybrid or new hybrid.
Comments
Comments are closed.