The government has decided on bi-annual updating of SRO 693(I)2006 to ensure speedy localization, where the parts or components localized for a certain vehicle by one/two manufacturers will be added to the list of locally manufactured components and a higher rate of duty will be applicable on them if imported, to promote localization.
Official documents revealed that as a general principle, localization will be targeted to attain the maximum possible value addition within Pakistan. This was not a part of earlier policy and thus an improvement. In addition, bi-annual updating of SRO 693(I)2006 will be carried out to ensure speedy localization.
The list of locally manufactured parts will be updated and after analysis, the parts or components localized for a certain vehicle by manufacturers will be added to the list of locally manufactured components and a higher rate of duty will be applicable to those parts if imported, to promote localization.
The government never intended to regulate the prices of the auto sector through a price fixation policy. The policy intended to promote industrial activities through competition among local auto manufacturers leaving market forces to determine open market value in the automotive industry.
The intention of the government has been manifested through Automotive Development Policy (ADP), 2016-2021, and the same principle was maintained in the Auto Industry Development and Export Policy (AIDEP), 2021-2026 with an enhanced emphasis on incentivizing the introduction of new models of vehicles through tariff measures localization of parts, and safety and quality improvements.
The Auto Industry Development and Export Policy (AIDEP) 2021-26 gives policy guidelines in the Consumer Welfare section to the manufacturers that the booking of a car, SUV, Van, and LCV will be done on partial payment i.e. 20% of the MRP.
In order to curtail the menace of ON-Money and late delivery, any delay over two months resulted in a penalty @ KIBOR+2 percent under ADP 2016-21. This has subsequently been increased to KIBOR+3% under AIDEP 2021-26 in addition to enforcement of the said condition through relevant SRO 837 dated 30th June 2021.
For the provision of vehicles to customers at affordable prices, AIDEP targets the promotion of indigenous parts and assemblies / sub-assemblies manufacturing and rationalization of imports. In this regard, the local value addition requirement has been fixed at 30 percent for parts manufactured under SRO 655(I)2006 except for the engine, gearbox, and transmission parts. Components or sub-assemblies shall not be eligible for concessions in case local value addition is less than 30 percent.
About time!!! The world is moving to 6th generation fighter jets and we still can’t produce a Suzuki Mehran engine locally. Especially considering that these companies (Toyota, Honda and Suzuki) have been ASSEMBLING locally for more than 3 decades! These companies should be penalised for their incompetency instead of the consumers.