The Pakistan Automotive Manufacturers Association has asked the government to change a law, which provides relief to the used cars importers but forces the Original Equipment Manufacturers to pay 17 percent general sales tax at the retail stage in addition to the income tax.The used car importers are paying low duties and taxes at fixed rates. The association also alleges that 11,000 hybrid vehicles were imported last year but the money was paid through suspicious channels. The State Bank has now suggested certain measures to curb the illegal import of used cars. Auto industry is one of the best earning sectors in the country and it needs the government attention and concessions. The country has strong subsidiary industry but it is always been overlooked by the policymakers and the political elite at the helm of affairs. Ignoring this vital sector is leading the nation to nowhere. The next budget is round the corner and the government is expected to announce relief for this sector.
Earlier, the Federal Board of Revenue had expressed some reservations about the proposed incentives for the new entrants in the industry and the matter was deferred without reaching a conclusion. A committee was entrusted with the job to prepare the new auto policy, but it has yet to define limits and parameters for the new scheme of things in the background of the present auto policy which is not consumer friendly. The exorbitant prices of vehicles are not in the interest of the companies, government and the consumers whereas international safety and quality standards are also ignored in many cases. The government has to revise import policy of the used cars and should assess how many vehicles should be produced annually in the local manufacturing units.
Pakistan can become hub of automobile manufacturing as demand for new vehicles is growing not only in Pakistan, but also in neighbouring countries. The international standards should have to be maintained in local made vehicles. The government should also rationalize tax regime as the demand of the vehicles will grow at a fast rate in the coming years and low tariffs will definitely increase the scope and volume of auto industry in the country. There is also huge central Asian market which needs cheap vehicles and Pakistan can cater to their needs better than any other country in the region. India is Pakistan’s rival in the industry, but it has no direct access to the central Asian states. Therefore, Pakistan has bright chances to market local made vehicles in the regional markets.
