Local auto parts manufacturers are optimistic that the government will further extend its support to local manufacturing by announcing a waiver or reduction of additional custom duties (ACD) to 0% on imports under SRO-655 in the Auto Policy 2021-26.
In a letter written to Industries and Production Federal Secretary Kamran Ali Afzal, Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) stated that through SRO-904(1)2021 dated July 9 additional customs duties on CKD over 1,000cc cars and light commercial vehicles have been reduced from 7% to 2%.
“Even higher relief in ACD was earlier provided through SRO-845, where ACD on CKD for local assembling of cars under 1,000cc and CBU under 850cc have been reduced from 7% to 0%,” the letter read.
PAAPAM Chairman Abdul Rehman Aizaz stated, “However, similar relief in ACD on import of raw materials and sub-components for local manufacturing of similar auto parts has been missed out.”
He added that higher ACD (7%, 4%, and 2%) on raw materials imported under SRO-655 than imported CKD will not be in line with cascading and make-in-Pakistan objective of the government of Pakistan.
“To promote local manufacturing, a positive delta for local industry is needed. PAAPAM, therefore, requests to waive or reduce the ACD to 0% on raw materials and subcomponents imported under SRO-655 for all kinds of vehicles to keep a minimum possible positive delta of 2% between imported CKD finished parts and imported raw materials.”
The association mentioned that the Ministry of Industries and Production has acknowledged that maintaining ACD on import of raw materials and subcomponents after waiver/reduction of ACD on imported parts (CKD) is not in line with the government’s policy of promoting local manufacturing to generate higher GDP and employment in the country.
PAAPAM stated that in the annual budget 2021 the government has taken landmark steps to boost the car sector through reducing duties on local manufacturing.