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Motorbikes — File Photo
Motorbikes — File Photo

KARACHI: The Economic Coordination Committee (ECC) is likely to cut down import duty on motorbikes to 35 per cent from 65 per cent in its meeting to be held on Thursday (Aug 16).

Worried bike assemblers and their vendors said they were not consulted by the government on its move.

Arshad Awan, CEO General Engineering, said reduction in duty on completely built-up units would boost imports of the two-wheelers and definitely hurt the local motorbike industry. “The import liberalisation is a clear indication that the government reluctant to foster local manufacturing of bikes, he remarked.

The U-turn in the government policy surprised the local motorcycle industry, which has been registering a substantial growth for the last 10 years.

Logic being presented to the ECC in a summary for approval is that the motorcycle industry is now mature and can withstand the onslaught of CBU motorcycles from China. The trade with India in auto sector factor has also been discounted on the same assumption, Awan said.

Ishtiaq Siddiqi, CEO SM Engineering, said that a more serious study is warranted before such a critical decision for the industry is taken.

The motorcycle sector is a rare success story.

He said the bike industry should not be subject to decisions which are whimsical at best and ostensible-based in self-interest of a few, at worst. Moreover, to have a closer look at the policy of reducing CBU tariff for imported motorcycles, one way is to look at the policies of countries where the motorcycle industry is profiting, he said.

A leading bike assembler said, China is the largest producer of motorcycles in the world and has surpassed even Japan in this area. With a production of 27 million units in 2010-11, its motorcycle industry is on most solid footing.

Even an industry of this proportion maintains a customs duty of 90 per cent on CBU import and at this high rate of duty, not everyone is allowed to import motorcycles. The Government regulates imports through issuance of import permits.

India produced 15.38 million bikes in 2010-2011. It maintains a tariff rate in the first schedule of 100 per cent. It is only through a custom notification (Notification No 12/2012, dated March 17, 2012) that it levies a tariff rate of 60 per cent on import of motorcycles. The local industry in India is further protected through elaborate import permits and homologation system. These systems make it next to impossible to export anything to this country that can be in competition with Indian produced motorcycles.

The leading bike assembler and their vendors said that the government knows that Pakistan’s bike industry is not even seven per cent the size of China and barely 14 per cent the size of India but efforts are being made to lower CBU tariff.

They said, the circumstances under which the policy is being made forces one to believe that another big scam is in the making. They feared loss of 1.5 million jobs directly and indirectly in case CBU tariff is reduced to 35 from 65 per cent.

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Aug 15, 2012 01:12am
good news