Auto industry seeks incentives in new policy

Published: January 16, 2019
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A car manufacturing plant. PHOTO: AFP

A car manufacturing plant. PHOTO: AFP

LAHORE: At a time when foreign currency reserves of the country are standing at a critical point, the use of local auto parts in vehicle assembly is saving the outflow of millions of dollars from the national economy, however, weakening auto sales for the past few months are a cause for concern, said auto vendors. The vendors, who contributed over 60% of auto parts to locally manufactured cars, complained that they were looking for encouragement in the Auto Industry Development Policy (AIDP) 2016-21 as the use of local parts was beneficial for the consumers and the government alike because the impact of rupee depreciation and the global economic slowdown was minimised. At present, according to them, 400 vendors from across Pakistan provide auto parts worth more than Rs300

million every day. “This has not been possible without the transfer of technology from Japan; the domestic vendors have 45 different technical assistance agreements with Japanese companies,” a vendor told a group of journalists. Sales of cars and light commercial vehicles in the country are expected to reach around 260,000 units in the current financial year. Annual installed capacity of the auto manufacturers is around 300,000 units. The vendors were of the view that true growth and benefits of technology transfer, job creation and value addition could be fully realised by providing incentives to the domestic auto parts manufacturers, besides the new players, but it had not been considered in the new policy. Ahmed Glass Industries CEO Ejaz Alam said the parts they produced complied with the international standards as they were approved by Japanese headquarters of the domestic car manufacturing companies after thorough quality tests.

Published in The Express Tribune, January 16th, 2019.

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