Import policy badly impacting automotive industry

Relaxation in the import policy, allowing import of used cars, trucks and commercial vehicles, is adversely impacting the local automotive industry. According to industry sources, this has resulted in a steep fall in the assembly and manufacture of these vehicles.
All sorts of vehicles being imported under PCT scheme could be easily manufactured in Pakistan. Sources claim that invalidation of import under this scheme would portend well for the industry, which has already been hurt by the sudden removal of zero rating of general sales tax.
Under Special Purpose Vehicle PCT 8705.9000, transport vehicles such as used sprinkler lorries and water bowsers are being imported and converted into trucks and different types of lorries. Data available shows that the import has dramatically increased during last couple of years but no action has been taken to stop, or at least monitor, this system of import.
While in 2008-09, only 952 'used' sprinkler lorries and water bowsers were imported, their number drastically increased to 6,977 in 2010-11. Besides, there is no age limit for the imported vehicles, and no emission standard (Euro-III) condition. These vehicles are also being sold to importers at throwaway prices.
In the 2009-10 trade policy, the Ministry of Commerce had eliminated the age limit for import of used trucks and buses, and introduced the 'remaining life concept' for the imported 'used' vehicles and at the same time Euro III emission standard became mandatory in certain cases.
This Euro III emission condition plays a vital role in decline of import of used vehicles, but this condition is not implemented on overall basis, thus providing another area from where one could import 'used' vehicles without much difficulty, sources said.
The number of trucks imported increased to 7,476 units during July-May 2010-11 under various schemes, and 7,050 units under PCT 8705. Out of this, 6,903 units were specialised vehicles, which included sprinkler lorries and water bowsers.
Under PCT 9750.9000, there is no age limit, no emission standard applicable, and, most importantly, these vehicles are very easily converted into trucks after removal of water tanks and sprinkle system installed on them.
These vehicles are sold in parts. Throughout the country, there are hundreds of fabricators who make such bodies as per customer's requirements, according to a report prepared by car manufacturers.
Local assemblers say that due to this, the share of local production in the market is continuously decreasing, and 'used' imported vehicles are gaining ground, which ultimately forces the organised sector to close down their manufacturing setups. Not only does such closure shake the confidence of foreign investors, it also leads to massive unemployment, industry sources said.
Local manufacturers have demanded removal of sprinkler lorries and water bowsers from 'Special Purpose Vehicle' category, depreciation reduction to one percent and not more than 24 percent (accumulated) in any case; restoration of condition of registration in the name of the applicant, at least one year prior to departure; restoration of the requirement for attestation of registration documents by Pakistan's embassy. They also recommend that all vehicles imported under any scheme should be Euro III-compliant, and age limit for 'old' and 'used' vehicles, imported under any scheme, should not be more than three years for trucks and buses.