Auto Industry Blames Higher Duties, Tax Structure for Lack of Exports

The auto industry has highlighted difficulties in the export of vehicles from Pakistan due to the imposition of increased duties and tax structure.

The 5th meeting of the Auto Industry Development and Export Committee (AIDEC) was held under the Chairmanship of the Federal Minister for Industries Rana Tanveer Hussain, where the auto industry emphasized the dire need for signing Free Trade Agreements (FTA) / Preferential Trade Agreements (PTAs) and consistent policies to enable localization of parts and components to make the two, three and four wheelers for achieving competitiveness in the international market.

The committee deliberated upon implementation of policy instruments under AIDEP 2021-26 in terms of achievements of exports targets by existing OEMs as well as New Entrants, creation of mechanism for Addition of Parts in SRO 693(I)/2006, new addition of parts components in SRO 693(I)/2006, implementation of WP 29 Regulation, phasing out of Concessions on imports of CKD components of Motor Cycles and Tractors from SRO 656(I)/2005 to Fifth Schedule, import of old and used Auto Parts, incorporation of EV Specific components for 4-wheelers EVs (8703.8090) under 5th Schedule of Customs Act, removal of Sales Tax on local inputs procured under Export Facilitation Scheme (EFS), Duty protection on locally Assembled City & Intercity Buses (Diesel, Hybrid & Electric) and imposition of 25% Regulatory Duty:

The auto parts vendors, on the other hand, highlighted that once a part is localized, the variant of the part discontinues, and as a result, the vendors face huge losses. The vendors recommended that, if one OEM localizes a part, that should be used by other OEMs requiring similar parts, and localization of parts and sub-components should be time-bound. The committee agreed that there should be a ban and penalty imposed on the import of used auto parts.

The minister concluded the meeting by recommending auto industrialists work on improving the quality, price, and exports of the auto industry in the international market. He further directed to form a subcommittee that will review and address the issues of the industry every quarter in terms of regulatory assistance required for exports in the international market. He also directed to devise an Auto Parts Manufacturing Policy aligned with its allied industry as localization of auto parts would result in competitive pricing of Pakistani-made vehicles in the international market.

The meeting was also attended by Saif Anjum, Secretary MoIP, Engr. Khuda Bukhsh, CEO EDB, Senior officers from the Ministry of Industries and Production, EDB, Ministry of Commerce, Science and Technology, FBR, Ministry of Communication, and Chairman PAMA, Chairman PAAPAM, Vice Chairman and dignitaries from leading Auto Industry namely, Ghandhara Industries, Master Motors, Pak Suzuki, Honda Cars, Honda Motorcycles/Atlas Group, Dysin Automobile, United Motors, Honda, Indus Motor Company, Dewan Motors, and Pro Tech.