ISLAMABAD, July 25: The government expects major investments from European car manufacturers including Renault, Volkswagon and London’s Black-Cab in response to its new auto policy that will break the "monopolistic culture" being followed by the Japanese auto firms.

Informed sources told Dawn that the "Auto Industry Investment Policy - New Entrants in the Car and Light Commercial Vehicle Sector" has been designed to do away with the distortion in the market created by the Japanese auto firms. "The industry has developed a monopolistic culture, is averse to fair competition and jealously guards against any attempt by a new player wishing to enter the market, despite a large demand-supply gap creating distortions in the market," writes the ministry of industries and production.

It says that the auto industry in Pakistan and car and light commercial vehicle sector was dominated by the Japanese companies "which follow similar policies on manufacturing, introduction of models, technology and prices".

Minister for Industries and Production Jehangir Khan Tareen told Dawn that Renault had invested a lot of time and money looking into setting up of its plant in Pakistan and was expected to come into the country with its new 1499cc family car "Logan" that it plans to launch in eight countries including Pakistan.

Similarly, Volkswagon had also been showing keen interest to start its operations in the country. Both the companies - Renault and Volkswagon - would have direct investment in Pakistan and would contribute towards improvement of the vendor industry.

He said the Black-Cab manufacturers were also planning to set up their plant in Pakistan, although their plan for import of 300 tax- and duty-free purpose built taxis had been shelved as they did not respond to the tender advertised by the government. "They are serious in setting up of their plant under the auto policy for new entrants," he said.

He did not respond to the question of land provided to the sponsors of Black-Cab by Sindh government, Civil Aviation Authority at all airports and Defence Housing Authority saying it was not his jurisdiction.

The government approved recently auto policy for new entrants that replaced deletion programme with Tariff Based System (TBS) for auto manufacturers. The new entrants are now allowed to import 100pc of CKD kits and components at statutory customs duty applicable to the import of components not manufactured locally or a period of three years from the start of manufacturing.

The new entrants, however, must be producing more than 500,000 cars in countries other than Pakistan with serious and significant global presence and must have their own assembly plants or have access to a recognised assembly plant.

According to official record, the ministry of industries has been persuading Renault that produces about 2.2 million passenger cars in 12 countries. It plans to produce an economy model 1499cc family car "Logan" in eight countries including Brazil, India, Iran, Morocco and Thailand. In Pakistan, it plans to market this car at a price of Rs640,000 per unit with 25-30 per cent local content.

Since the company also produces Nissan cars on a shared platform, the component manufacturers would therefore have the opportunity to sell chassis components to both Nissan and Renault that would lead to broadening of vending base through more investment, technology acquisition, integration in the international value chain and job opportunities.