LAHORE, Dec 20: The country’s auto industry demanded from the government to let the negative list of tradable items remain if India does not abolish non-tariff barriers (NTBs), as committed at the time of grant MFN status to the largest South Asian neighbour.

“Islamabad had made a commitment to the local industry that if India fails to remove trade barriers, negative list will not be abolished,” said Munir Bana, Chairman of the Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM), in a statement on Thursday.

He urged the government to review its decision of granting MFN status to India as opening of trade will inundate “our smaller and fragile markets ruining an industry already hit by our inconsistent policies as well as energy crisis”.

He said even though India granted MFN status to Pakistan since 1996, the balance of trade is heavily tilted in India’s favour because of NTBs and paralegal barriers, which deny access to Pakistani goods.

Thus, Pakistan's exports to India could not increase beyond $332 million since 1996-97 while even without being granted the MFN status, India’s exports to Pakistan have increased manifold to $2 billion during the same period.

He said the negative list should not be abolished and all 65 items of auto parts should also remain in Pakistan's Sensitive List for trade with India. “Moreover, the sensitive list needs to be maintained for at least next 10 years, before we can consider any reduction in tariff lines,” he added.

Bana said abolition of the Negative List before providing a level playing field to the Pakistani auto parts manufacturers, will cause grievous harm to the local industry, which is already suffering from declining volumes, devaluation of rupee, electricity load shedding, gas shortages and skyrocketing inflation.

"There is no clarity on the issue of phasing out of negative list. The cabinet had clearly decided that the negative list will not be phased out by December 31, 2012, unless India removed all NTBs to our satisfaction," he recalled.

PAAPAM vice chairman, Usman Malik, said Pakistan's auto industry is not prepared for phasing out of negative list ,as the government has still not implemented capacity building measures in their respective departments for gearing up to the onslaught of Indian products.

He said the ministry of industries had also admitted that Pakistan's domestic industry was in a gross comparative disadvantage position in terms of energy and access to credit.