Pakistan Auto Parts Manufacturers Oppose Proposal to Cut Duties on Import of CBUs

The auto parts manufacturers, opposing the proposal to reduce duties on import of CBUs, have said the decision seems to be another well-conceived plan against the fast growing local bike industry, as China being the largest producer of motorcycles in the world, still maintains a custom duty of 90 per cent on CBU import while India, the second largest producer, keeps a tariff rate of 60 per cent.

The Pakistan Association of Automotive Parts Accessories Manufacturers (PAAPAM) Chairman Syed Nabeel Hashmi feared that the move to cut down rates on import of completely built units (CBU) to 35 per cent from 65 per cent would destroy the engineering base of the country, also endangering millions of jobs and investments. He said that the proposal indicates that the policy makers intend to make the country a trading instead of manufacturing state.

"The two largest producers of bikes in the world, including China and India, protect their industry through limited import permits and homologation system. These systems make it impossible to export anything to these countries that can be in competition with locally produced motorcycles," he said.

He said that China, with a production of 27 million units in 2010-11and having custom duty of 90 per cent on CBU import, does not allow everyone to import motorcycles, as its government regulates imports through issuance of import permits, he said.

"India, with total production of 15.38 million units of bikes, maintains a tariff rate in the first schedule of 100 per cent, however levying a tariff rate of 60 per cent on import of motorcycles, he added.

PAAPAM Vice Chairman Munir K Bana showing his concern said why an industry not even 7 per cent the size of China and merely 14 per cent the size of India needs to bring down its tariffs to such levels where the local auto manufacturing industry will be turned into a trading market.

He said that unofficial figures put the 70cc motorcycle production at over 2 million. With current growth levels the industry is estimating to produce well over 3.5 million motorcycles annually in the coming years.

The Association strongly urges the government not to indulge in any policy changes for an industry that has being an excellent example of localization and growth over the last five years in spite of the countries worsening economic and law & order situation, the vice chairman said.

PAAPAM managing committee senior member Usman Malik said that the local industry has already absorbed shocks of power shortage, inflation and increase in cost of doing business. On the other hand, policies in the country are made behind the closed doors without consulting the actual stakeholders, he said. "Tariff cut on CBU rates for a 90 per cent localized industry is nothing but short of open ended anti-Industrial policy," he added.

He said that tariff cut on CBU rates will lead to aggravating an already worsening law & order situation and put a huge dent on active investments which are currently being undertaken by the local two wheeler industry in capacity building and engine manufacturing.