KARACHI: Despite the introduction of completely built-up (CBU) hybrid electric vehicles by two car assemblers, the market share of these vehicles remain negligible, the Pakistan Automotive Manufacturers Association (Pama) said in its budget proposals on Friday.

Around 40,000 hybrid electric vehicles (HEV) have been imported in Pakistan in the last four years under various used car schemes costing the economy around $500 million, the body claimed.

Majority of HEVs plying on the roads are up to three-year old/90,000km used vehicles.

Citing reasons of low market share, Pama said the law, under which concessions are allowed, doesn’t give a level playing field to documented assemblers who provide full warranty and after sales support for new HEVs.

The provisions of SRO 499 only extend duty/tax relief at import stage and not on subsequent retail stage. This anomaly in SRO 499 results in original equipment manufacturers (OEMs) paying full 17 per cent GST at retail stage in addition to income tax compared to very low fixed duty/taxes being paid by used car importers with absolutely no income tax as their sales are not documented.

In addition to significant lower duty/taxes fixed in SRO 577, HEVs gets 50pc reduction on applicable duty for up to 1,800 cc and up to 36pc depreciation (1pc per month) due to age – taking the total concession up to whopping 68pc. There is no way documented OEMs can compete with such discrimination on the applicable duty/taxes, the association maintained.

The association said the industry has submitted a proposal to the Federal Board of Revenue which has assured the industry of removing anomalies.

In its budget proposal, Pama has urged the government to remove the anomalies in SRO 499 which puts documented taxpaying industry at a disadvantage.

The proposal suggests that SRO 499 should be restricted to new HEVs only and incentives should be extended to OEMs at retail stage by changing the provisions of SRO499 to encourage documented manufacturers.

Pama said the government had extended duty and tax concessions on the import of HEVs in June 2013 when the global oil price was at an all time high of $100 per barrel. At that time, Pakistan’s trade deficit stood at $15.3 billion and the contribution of oil imports within the overall import bill was 35pc. The total average HEVs imports were at less than 2,000 units per year at that time.

Last year, close to 11,000 hybrid vehicles were imported, costing approximately $160m which was sent out through illegal channels. The State Bank has also acknowledged the official import data does not reflect the amount sent through official banking channels.

Published in Dawn, April 22nd, 2017