Auto Parts Manufacturers Demand Duty Cuts on Raw Material Imports
Auto Parts Manufacturers Demand Duty Cuts on Raw Material Imports

With several benefits announced for the car manufacturers recently as a part of the new auto policy, several subgroups within the automotive industry have also become active in terms of demanding benefits for their operational advantage.

In a recent development on that front, the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has sought a reduction in the Additional Customs Duties (ACD) upon the import of raw materials and sub-components required for the local manufacturing of parts.

In a letter addressed to the Federal Secretary of Industries and Production, Kamran Ali Afzal, PAAPAM highlighted that under the Statutory Regulatory Order (SRO) 904(1) dated July 9, 2021, the ACD on the import of the Completely Knocked Down (CKD) kits of vehicles with engine capacity over 1,000cc cars and those of light commercial vehicles have been decreased from 7% to 2%.

The letter further added that the ACD on the import of CKD kits for vehicles with engine capacity under 1,000cc had been reduced from 7% to 0%.

The same benefit has been given for the import of the Completely Builtup Units (CBUs) of vehicles with an engine capacity smaller than 850cc. “However, similar relief in ACD on import of raw materials and sub-components for local manufacturing of similar auto parts has been missed out.” PAAPAM Chairman, Abdul Rehman Aizaz, stated in the letter.

“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 sub-components 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.” Aizaz added.

He further highlighted that the abolishment of ACD on the imports of raw materials for manufacturing auto parts will complement the government’s plans of creating a market of fully indigenized production of vehicles. He added that the strategy will also result in an increased GDP and more job opportunities for the people.

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