PHOTO: REUTERS
Earlier, Renault had asked the government to give additional time for the launch of its vehicles in Pakistan, otherwise, it would quit the market. The new auto policy for 2016-21 has offered benefits to new players, including many tax exemptions, under the Greenfield investment status, if the companies set up local assembly plants before June 2021.
The company was eying other benefits as well, which were offered to the companies setting up their plants in the Special Economic Zones (SEZs) and planning to start production before June 2020.
https://i1.tribune.com.pk/story/1978532/2-renault-seeks-extension-tax-exemption-till-2023/Renault seeks extension in tax exemption till 2023
These companies could enjoy 10-year tax exemption under the SEZ if the setup was put in place before the given date. After the deadline, they will only be able to get five-year tax holiday, as per the auto policy. Owing to its internal issues, Renault could not set up its plant on time and now the economic situation of the country is not satisfactory.
The rupee has declined more than 40% against the US dollar in the inter-bank market since December 2017 while the key interest rate has been increased by 650 basis points since January 2018.
Due to these factors, the vehicle demand has decreased 40%, according to Aamir Allawala, former president of the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam). Renault mainly produces 1,700cc vehicles, on which the government has imposed 10% federal excise duty (FED). Therefore, company officials took up the matter with the PM adviser, according to a market source.
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