ISLAMABAD, Dec 8: The federal government is expected soon to allow the new car manufacturers to start production at 40 per cent deletion rate to attract fresh investment in the sector and introduce better competition.

Minister for Industries and Production Jehangir Tareen told reporters here on Wednesday that the government had already allowed two tractor manufacturers to start production at 40 per cent deletion to meet 80 per cent deletion target over a period of five years.

"On the same lines, the government could allow fresh investments in the car manufacturing sector to introduce an environment of competition", said Mr Tareen. This would have a very positive impact on the growth of local vendor industry as well, he added.

He was asked as to why the government was not allowing new manufactures with reasonable deletion rate to start competition and as to why the Engineering Development Board (EDB) was protecting existing manufacturers by asking the new investors to match there deletion rate which they have achieved in more than 15 years. He agreed that some manufacturers were still using imported parts despite their deletion.

The minister agreed that it was unreasonable on part of the EDB and said the government had decided to restructure the EDB through injection of fresh blood in it. He said a well considered policy would be formulated with input from all stakeholders to attract fresh investment in the car manufacturing and vendor sector.

He said the Mitsubishi of Japan will be marketing 8,000 Japan-assembled cars during the current fiscal year and hopefully they would be starting local manufacturing in the years to come.

He said the current state of affairs in the car industry was because of consumer banking which showed signs of growing economy and the premium factor was due to urgency of the customers to immediately have their own cars. He said the government could not allow import of second-hand cars for immediate gains that would later result in loss to the economy.

The government has been under continuous criticism for a couple of years for unchecked prices of new cars, their premium and poor quality. A number of committees set up by the government to resolve the issue have never made their reports public.

The minister parried questions that some manufacturers have stopped booking of their new cars for four to six months and said some manufacturers would start their double shifts and increase their investment.