Japanese firms seek incentives for assembly of hybrid vehicles

Published April 3, 2020
Two firms call for govt to differ announcement of policy.  — Dawn/File
Two firms call for govt to differ announcement of policy. — Dawn/File

LAHORE: Two Japanese car manufacturers have called upon the government to offer incentives for local assembly of hybrid vehicles on the lines of those suggested for electric vehicles in the proposed five-year policy.

In their comments on the draft policy circulated by the Engineering Development Board (EDB) among stakeholders, the Honda Atlas Cars and the Pak Suzuki Company have urged the board, as well as the ministry of industries, to give same incentives to the old industry players and the new entrants for local assembly of electric or hybrid vehicles.

The two companies have urged the government to defer announcement of the policy, drafted by the EDB, for bringing electric vehicles and hybrid technology into the country by encouraging their local assembly for at least one year in view of losses likely to be caused by the coronavirus disease.

“This will give us more time for brainstorming and the industry will also get much needed time to recover from the current situation,” an executive of Pak Suzuki Company told Dawn from Karachi by telephone.

In letters written to Raza Abbas Shah, the EDB chief executive, both Honda and Suzuki said customs duty on completely knocked down (CKD) hybrid vehicles be fixed at 1pc _ at par with electric vehicles (EV). The draft policy has suggested 1pc customs duty on import of EV-related CKD and 10pc on hybrid-related CKD.

They also called for slashing the suggested 30pc duty on imported components for electric and hybrid vehicles to 10pc for all industry players by withdrawing a 20pc concession allowed to new entrants like Hyundai and Kia under the Auto Industry Development Policy (AIDP) 2016-2021.

“Since the local assembly of both EVs and hybrid cars will require fresh investment in plants and machinery, the draft policy should not discriminate between the existing manufacturers and the new ones,” a senior Honda Atlas Cars executive said while talking to Dawn on Thursday.

Furthermore, the carmakers suggested, duty on the import of spare parts be cut down to 25pc from 45pc, and doubled to 50pc on completely built units (CBUs).”We have also asked the EDB to halve sales tax on the industry to 8.5pc to help it reduce its costs and prices,” the Honda executive added.

The two companies recalled that a high-level meeting held on March 12 had discussed and finalised the tariff for cars, SUVs and LCVs. “But the draft policy does not reflect the figures discussed and finalised at that meeting,” the letters pointed out.

PAAPAM VIEWPOINT: The Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) has opposed the idea of giving incentives to original equipment manufacturers (OEMs) for five years and called for incremental increase in import tariffs on parts and components for both electric and hybrid vehicles to be manufactured locally. “The policy should aim at encouraging indigenization of parts and components. To begin with, imports should not attract heavy duties. These should be levied gradually in order to create jobs and keep prices low,” an auto parts vendor said.

In its comments on the draft policy, the PAAPAM also called for incentives for auto parts manufacturers.

It said the policy should exempt from taxes the establishment of plants for producing EV-related parts and equipment for local and export markets.

It said auto parts manufacturers be provided loans at 5pc interest rate for creating facilities for development and manufacture of automotive EV parts and infrastructure development equipment.

Published in Dawn, April 3rd, 2020

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