Auto parts segment calls for reduction in duties

Regrets cumulative levy on import of auto parts amounts to almost 90%

KARACHI:

The importers of automobile spare parts have called upon the government to reduce duties, applicable on auto parts, to mitigate the risk of smuggling.

“After accounting for all the charges, the cumulative duty on import of auto parts is touching almost 90%,” said Pakistan Automobile Spare Parts Importers and Dealers Association (PASPIDA) Chairman Muhammad Ahsan during his visit to the Karachi Chamber of Commerce and Industry (KCCI) on Monday.

Requesting the government to rationalise the duty structure on auto parts, he pointed out that hefty duties have encouraged smuggling of equipment which has made it difficult for registered and legitimate businesses to compete in the market.

Speaking on the occasion, PASPIDA Patron In-Chief Arshad Islam said that while localisation of auto parts was vital, domestic companies were yet to achieve the capacity needed to cater to the needs of entire Pakistani market.

Many old models are not produced anymore by the original equipment manufacturers therefore the automobile industry is forced to import them, he noted.

Islam expressed concern over high rates of taxes and customs duty imposed on the import of automotive parts.

Karachi Chamber of Commerce and Industry (KCCI) President Muhammad Idrees termed the demand of the two officials genuine and called for reduction in duties applicable on auto parts.

Read Auto sector growth linked to ‘Make in Pakistan’

“Running businesses has become quite challenging due to instability in exchange rate, gas, electricity and water crises, customs and taxation related complexities and rising inflation,” he said. “The government should provide relief to the business community.”

Speaking to The Express Tribune, Arif Habib Limited analyst Arsalan Hanif stressed that the leadership should consider the demand of auto part manufacturers if it wanted to steer localisation in automobile industry and discourage smuggling.

“The reduction in duties will make local cars cheaper besides generating employment,” he said highlighting that the survival of auto part manufacturers was becoming difficult day after day on the back of soaring inflation coupled with currency depreciation.

According to him, these two factors had turned local businesses uncompetitive compared to the firms that sold imported parts.

As a result, local original equipment manufacturers utilised imported auto parts given that they cost less but on the other hand, the rise in imports mounts pressure on the external account, he said.

Published in The Express Tribune, November 30^th, 2021.

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