THE previous government introduced an auto policy for five years and waived some duties and taxes for new entrants in the auto industry. It was, of course, a good step.
However, before this the government should have strengthened the auto vendor industry, which will not only make cars cheaper, it will restrain original equipment manufacturers from doing big transactions in US dollars for importing auto parts for manufacturing the vehicles.
There are many Japanese vendors of auto parts running their production units around the world, resulting in the production of low-cost vehicles by local original equipment manufacturers. This helps them play with modest vehicles in the market.
In case of Pakistan, we do not have any expertise of vendors to match international levels of technology. Consequently, this is affecting the retail price of cars and making them expensive.
The government should have introduced ‘auto supplier-ship strengthening policy’ prior to the auto policy.
What will happen next?
New entrants in the auto industry will produce expensive models anew or import completely built-up units. That will not be positive because consumers will never get low-cost vehicles.
Why are vehicles cheap in our neighboring country? It is because they enjoy maximum localisation in auto industry since all main global auto suppliers have their production units in India.
It is the responsibility of the government to bring world class auto parts suppliers to Pakistan. Remember, any auto company planning to commence its operations in Pakistan will come up with expensive units, until and unless auto supplier industry is established here.
Mansoor Ahmed
Karachi
Published in Dawn, July 9th, 2019
