AIDC to discuss national electric vehicle policy with Razak tomorrow

The Auto Industry Development Committee (AIDC) is to meet on Friday (tomorrow) with Advisor to Prime Minister on Commerce, Textile, Industries and Production and Investment, Abdul Razak Dawood to discuss National Electric Vehicle Policy and Automotive Industry Development and Export Plan (AIDEP), well informed sources told Business Recorder.

Giving the details, sources said new entrants (Greenfield /Brownfield) Under Automotive Development Policy, investment of one billion approx. has been ensured by grant of Greenfield status to eighteen new investors whereas two closed down units have also been revived. Local manufacturing by new cars, LCVs, SUVs and HCVS manufacturers has already started. Five companies including Regal Automobiles, United Motors, Master Motors, JW Forland and Kia Lucky Motors have started production. However, Hyundai Nishat has been granted the manufacturing certificate and its first model i.e. an LCV, will be launched in January 2019. The manufacturing facilities of Dewan Farooq Motors and Ghandara Nissan have also been revised under ADP.

The sources said, Auto Development Policy (2016-21) has attracted an overwhelming response in almost all segments of four wheelers, its sustainability will provide impetus to overall development of automotive sector of Pakistan. The policy has lived for almost three and a half years and investment has been made by local and foreign automotive manufactures. Few companies are adjusting their business plans in view of devaluation of rupee against dollar and the economic situation of the country. The imports are getting expensive in view of increased dollar prices. The matter was discussed in EDB's Board of Management, which has advised that AIDC may consider exporting parts and components at initial stage and ultimately the CBUs.

In this regard, the BOM also highlighted that on expiry of ADP 2016-21, the new policy should be named as Auto Industry Development and Export Plan (AIDEP). AIDC is requested to deliberate upon the proposal of AIDEP 2021-26. In this regard, a kick off meeting for AIDEP may be scheduled with the consent of the members upon venue and date.

Talking about National Electric Vehicles Policy by EDB/MoI&P, sources said that a meeting of Prime Minister's Committee on Climate Change was chaired by the Prime Minister on May 17, 2019 in PM Secretariat in which Ministry of Climate Change was tasked by Prime Minister to prepare a Policy for Electric Vehicles. First meeting of the committee was held on May 23, 2019 in Ministry of Climate Change. EDB was advised by Ministry of Climate Change (MoCC) to hold a stakeholders meeting for their views on draft policy on EVs formulated by MoCC. Accordingly, the meeting of stakeholders was scheduled on 29 May 2019. The stakeholders gave various inputs which were shared with Mol&P and Ministry of Climate Change (MoCC). Subsequently the matter was placed before the AIDC of the EDB in its 28th meeting held on June 19, 2019. AIDC argued that EDB/MoI&P is best placed to formulate the Electric Vehicle Policy instead of MoCC. The MoI&P took the matter with Cabinet Division wherein it was decided that MoI&P is mandated for EV policy formulation under rules of business and possesses requisite expertise as well. Accordingly, MoI&P initiated work on EV Policy formulation and designated EDB as the secretariat of the Electric Vehicle Policy formulation. However, Electric Vehicle policy was presented again before Cabinet on November 05 2019 by MoCC. PAMA raised objections vide their letter dated November 04, 2019 addressed to Secretary MoI&P which was referred by the PM in the Cabinet meeting in addition to EDB/ MoI&P's stance on EV Policy.

An inter-ministerial committee has been constituted co-chaired by the Ministry of Industries and Production.

The committee will discuss localization of automotive parts and accessories under S.R. 655(1)2006 of June 22, 2006 letter submitted by Chairman PAAPAM. In the previous AIDC meetings various issues including calculation of value addition, levy of duty at the rate of component or sub-component or classification of certain inputs in relevant category, and manufacturing of existing models of a group company on a newly constructed vehicle manufacturing facility under ADP 2016-21 without any tariff incentive on existing models were discussed.

EDB recently received a letter from Ministry of Overseas Pakistanis regarding "duty free Import of one hybrid car upto (3000 cc) to Foreign Exchange Remittance card (FERC) holders, who remit $100,000/·over a period of 2 years". The letter had been forwarded to PAMA and PAAPAM for comments. To summarize, following items need discussion: (i) requirement of value addition (30%) in the light of SRO and requirement of localization; (ii) discussion on classification of assemblies, sub-assembles and levy of duty; (iii) Letter by PAMA with reference to use of Greenfield manufacturing facilities for manufacturing existing models; (iv) permission of imports against foreign remittances or alternate solution; and (v) other auto sector technical matters related to TBS and budget proposals. The sources said, since in the auto sector technical matters arise frequently, it was proposed that a technical committee comprising members of EDB, FBR, PAMA (on case to case basis) be set up. PAAPAM (on case to case basis) may be constituted to deliberate on technical matters related to automotive sector.