Engineering Development Board (EDB) Chief Executive Aitazaz Niazi has assured automakers and vendors that the government would first protect the interests of the local auto industry while conducting trade with India.
“We support the local industry. Government will not make any policy, especially during trade with India, that would hurt the local auto industry,” said Niazi. He was speaking to the media on the sidelines of Pakistan Auto Show 2011 – a three-day exhibition recently organised at the Lahore Expo Centre.
Speaking to the media, Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) Chairman Syed Nabeel Hashmi said that the time to open up auto trade with India is not right because of the present nascent local industry.
“We make 160,000 cars annually while India produces such number of cars in just one month. I think until we reach the 500,000 mark, we will remain at a disadvantaged position during trade with India,” he said.
The auto industry has asked the government to take a go-slow approach while improving trade with the neighbouring country.
Automakers and vendors support trade with India but they are fearful that any radical change may hurt the industry because of the big size of the Indian auto industry.
But more than that, automakers are concerned over the new entrant policy for foreign car manufacturers. Government wants to bring new car manufacturers into the country and for this it has already softened various preconditions for foreign companies to enter in Pakistan.
Niazi also assured automakers on the new entrant car policy. “Government will not finalise any new entrant policy that may hurt existing car manufacturers,” he said.
Furthermore, automakers argue that owing to low economies of scale for auto manufacturing in Pakistan, it is more expensive if compared to India. Hashmi said the local automobiles market is growing fast and in a few years, it will acquire bigger economies of scale and then the local industry can compete better with big Indian market.
Carmakers argue that any special tariff to new entering carmakers will hurt existing players. They said the new carmakers must compete existing players with same duty structures.
They say government can provide cheap land and other facilities to new entrants in initial years but any concession in tariff will badly hit existing carmakers who have invested billions of rupees in country.
Commenting on the occasion, Chief Executive of Indus Motors Pervez Ghias said that automakers and vendors do think that trade with India is beneficial but we have been very cautious owing to the small size of local industry.
Like other industries, automakers of Pakistan also believe that non-tariff barriers in India will discourage Pakistani exports to India.
They are fearful that Indian auto manufacturers and parts makers will easily penetrate local market while Pakistani exports to India may not grow because of the non-tariff barriers in India.
Published in The Express Tribune, October 28th, 2011.
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