The true growth and benefits of technology transfer, job creation, and value addition can only be realized by providing incentives to local auto parts manufacturers which have not been considered in the new Auto Development Policy.
The representatives of the vendor industry stated this while talking to a select group of journalists during visit of the vending industrial units. At a time when foreign exchange reserves of the country seem to be standing on a critical point, localization of different auto parts has been saving the outflow of millions of dollar from the national economy, whereas the decreasing trends in sales for last few months are still a point of concern, they said.
Chief Executive Officer Ahmed Glass Industries Ejaz Alam said that the parts they produce comply with the international standards. The Japanese headquarters of the car manufacturing companies only approved the parts only when the quality is thoroughly tested and the parts conform to standards of OEMs on global level, he added.
He said the vending industry is looking toward the government for its policies conducive to encourage and increase localization level in locally produced vehicles. As new entrants are coming, OEMs will offer more choices to customers and in this pretext ADP 16-21 goals of employment generation and technology transfer are to be achieved through incentives provisions of manufacturing processes at vendors, he added.
The vendors contributing to over 60 percent localisation in locally manufactured cars were looking for encouragement in ADP 2016-2021 as the localization has proved to be beneficial for the auto industry consumers and the government as well since the impact of devaluation and global crisis is minimized through local engineering base. For last 30 or so years the local engineering base has been helped by the car manufacturers both in terms of business and transfer of technology which helped local industry to grow and prove its mettle.
The local parts manufacturers said this development was made during last three decades when the three Japanese car manufacturers started acquiring parts locally which made Pakistani engineering companies viable. Through the research and quality conformation by these companies, the import of parts was substituted.
Currently, 400 vendors from all over Pakistan are providing parts worth more than Rs 300 million every day that reflects the level of localization achieved in last 29 years of its journey. They said that with achieving a significant level of localization every year the local car manufacturers jointly with vendors play their role in narrowing the trade deficit gap by procuring/supplying parts from local vendors.
The vendors said the installed capacity of OEMs for cars and light commercial vehicles (LCVs) is around 300,000 units which help their direct employment of 30,000 people and indirect employment of 2,500,000 people in the auto parts manufacturing industry. Moreover, new auto players have made their way into the market motivated by the country's Auto Development Policy 2016-21, opening the doors to a multitude of joint ventures.
Representatives of Al-Badar Engineering Company (Pvt.) Ltd. said that the progressive growth in the auto sector has led in the creation of job opportunities and providing livelihood to millions of households.
"This has further ensured the fulfilment of one of the government's macroeconomic indicators by reducing unemployment. The increased number of employment opportunities has also provided the circular flow of money in the economy," they said. A.R. Gauhar of Infinity Engineering (Pvt.) Ltd. said the infinity school of engineering developed by OEM is providing training to youth to enhance skills as skill-based training is essential to maintain the high tech CNC machines in automotive industry. "We have 90 percent employment ratio of our trained youth," he added.
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