Pakistan Association of Automotive Parts & Accessories Manufacturers (PAAPAM) has urged the Ministry of Industries and Production (MoI&P) to review Auto Development Policy (ADP) 2016-21, aimed at seeking concessions denied at the time of its approval. The association has also sought time from the Prime Minister's Advisor on Commerce, Textile, Industries and Production and Investment, Abdul Razzak Dawood.
The auto industry which had raised the issue of corruption in the Engineering Development Board (EDB) on a number of occasions at different forums, however, has now expressed support for the revival of the organisation and "Make in Pakistan "approach.
PAAPAM's says that the auto parts manufacturing industry is faced with several challenges, affecting its profitability as well as its capability to contribute to GDP growth. PAAPAM has been in discussion with the Ministry of Industries and Production on issues of auto sector.
The association's chairman Ashraf Shaikh, in a letter to Razzak Dawood, stated that as per Automotive Development Policy (2016-21), a comprehensive five-year structure was provided for the auto industry and notified in budget 2016-17, including customs duty at the rate of 1 percent on import of raw materials not manufactured locally.
The letter further states that due to pre-determined roadmap and considering investments in the auto industry through new entrants, the parts manufacturers planned to further invest to cater to future demand. However, due to imposition of irrational Regulatory Duty on auto industry's major raw materials, ie, steel sheets, bars, rods, etc, ranging from 10-30 percent, survival of automotive parts manufacturers is in jeopardy, especially since no RD was levied on finished auto parts.
Parts manufactures argue that it is totally unjustified to keep on modifying approved tariff structure by imposing regulatory duties from time to time.
The industry has requested removal of RD on imports of raw materials by auto parts manufacturers, especially because "auto grade" steel is not manufactured locally.
Commenting on ADP 2016-21, PAAPAM said that it was announced in April 2016 and it provided no encouragement or incentive to auto parts vending industry, which, if provided with incentives, can curtail automobile production cost up to 35 per cent through localization of high tech parts and not only save foreign exchange but also earn foreign exchange by exporting parts to the global market. PAAPAM has urged the government to revisit ADP by all the stakeholders, as envisaged at the time of its inception.
On a proposal floated by the Punjab government, (Agriculture Department), for import of five year used tractors along with exemption from duties and taxes, PAAPAM has termed it devastating.
"The local tractor industry is capable of manufacturing 100,000 cheapest tractors annually," the Association added.
Since Pakistani tractors as well as parts are currently being exported to various countries, allowing import of used tractors and parts will not only further erode the national exchequer but will also result in huge unemployment, Ashraf Shaikh continued.