Paapam decries proposed electric vehicles policy

Updated June 13, 2019

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Paapam said the government needs to consider the three categories under one policy to curb fossil fuel utilisation. — Dawn/File
Paapam said the government needs to consider the three categories under one policy to curb fossil fuel utilisation. — Dawn/File

ISLAMABAD: The local auto parts manufacturing industry on Wednesday criticised the proposed national electric vehicles (EV) policy and urged the government to promote and protect the existing sector.

In a statement, Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) said regional countries like India, Thailand and Indonesia are treating all types of vehicles under one category.

Paapam said the government needs to consider the three categories — Hybrid Electric Vehicles (HEVs), Battery Electric Vehicles (BEVs) and Plug-In Hybrid Electric Vehicles (PHEVs) — under one policy to curb fossil fuel utilisation.

“Each country is safeguarding its industry to protect employment and investments. But this is not the case here in Pakistan,” said Mashood Ali Khan, former chairman Paapam said in a statement issued on behalf of the current Paapam body which is currently out of the country in connection with an auto exhibition. He said drastic reduction in customs duty for complete built up (CBU) and low custom duties for complete knocked down (CKD) units will prevent localisation. The auto part makers said that with the import of 60 thousand units at 1 per cent custom duty and 5pc sales tax, the revenue loss is calculated to be Rs100 billion. Huge forex outflows will happen in case of CBU/semi knocked down (SKD) units’ imports since EVs are high value products and the import of 60 thousand units will lead to outflow of $1.5 billion in this sector only, the body claimed.

The body further said that drastic reduction in duties and sales tax will adversely affect revenue collection as the auto industry is the second largest contributor to the national exchequer.

Paapam maintains that other regional countries have focused on indigenisation because vehicles were not primary cause of pollution.

Pakistan’s EV introduction plans is to have 30pc BEVs vehicle by 2030. The salient features of policy framework should be in line with ground realities, the body said, adding that Pakistan should have a three-step policy.

In the first step from 2020-25, the government should promote indigenisation in prevailing products and promote clean renewable energy programme. In the second step from 2026-30, the country can introduce HEV/PHEV promotion policy and build charging infrastructure and then from 2031 onwards EV policy should be executed to achieve targets.

“India, USA, Thailand, and Indonesia are securing their auto industry by gradual shift from fossil fuel to EVs without affecting their existing auto industry,” the body said.

Paapam said careful consideration of current economic condition of the country and forex outflows should be taken into account before giving concessions to any industry. The government should govern local auto industry as per incentives given in Auto Development Policy 2016-21, and promote EVs in the next policy.

Published in Dawn, June 13th, 2019