Parts’ makers seek 10-year EV plan

Automotive parts and accessories manufacturers have urged the government to take essential measures in the upcoming budget to rescue the struggling auto parts industry, which supports millions of families across the nation.

In its budget proposals submitted to the government, Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) called on the government to take immediate action to revitalise the industry by focusing on boosting exports and encouraging the local production of engineering goods.

Paapam Chairman Abdul Rehman Aizaz, Senior Vice Chairman Mumshad Ali and Vice Chairman Taufiq Sherwani highlighted the importance of conserving and earning foreign exchange to cure economic ills as well as the potential for job creation and economic growth through such initiatives.

To achieve the objectives, Paapam proposed a 10-year plan to support the adoption of electric vehicles alongside localisation efforts. It called for shifting the import assessment of new auto parts from weight-based to unit-based customs tariffs and stressed that imported used auto parts should not be reused for safety reasons.

The association sought a consistent Automotive Industry Development and Export Policy (AIDEP), under which all 13 assemblers were regulated to enhance production.

They underlined the central role of the automobile industry, on which the aftermarket was dependent, adding that duties and tax mark-up should be reduced and production increased to promote car leasing culture in Pakistan.

It strongly advocated the relaxation of certain duties on the raw material not available locally in order to reduce production costs. Additionally, there is a need to remove federal excise duty on the automobile industry to achieve economies of scale.

In the proposals, former Paapam chairman Syed Nabeel Hashmi criticised the import of used cars under flexible terms, noting that over 90% of locally produced models, including tractors and motorbikes, had achieved significant localisation of over 95%.

He emphasised the importance of supporting local industries for integrating into the global supply chain and rationalising duties to regain regional competitiveness, which had been undermined by the dollar’s escalation and high input costs.

Hashmi proposed a flat 5% sales tax on aftermarket parts production to stabilise the industry.

Published in The Express Tribune, May 28^th, 2024.

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