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ISLAMABAD: The government and the auto industry will start consultations on new auto policy aimed at rationalisation taxes on the industry, and bringing improvement in it.

The existing Auto Policy 2016-2021 announced by the former Pakistan Muslim League-Nawaz (PML-N) government will expire next year.

Talking to a group of journalists, Indus Motor Company (IMC) chief executive Ali Asghar Jamali said since the major impact on prices of vehicles was from taxes imposed by the government, any relief in taxes would ultimately result in reduction of prices.

"We have submitted our proposals to the government for rationalising the taxes on auto sector. Removal of duties like Federal Excise Duty (FED) and Additional Custom Duty (ACD) could help the industry in reducing prices," he said.

According to him, the concerned ministries have agreed to review the taxes but in December, when the government and auto industry would be renegotiating the Auto Policy 2016-21, which expires June 30, 2021.

"For controlling the black marketing or premium money on sales of new vehicles, we have submitted various proposals to the government. However, since the sales tax is subject to provincial government, the consensus/coordination between center and provinces has been an issue," the CEO said, while replying to a query.

While sharing impacts of market slowdown and closure of industry following the outbreak of Covid-19 pandemic, he said being the largest manufacturing industry; the auto sector had plunged into a deep crisis during the nationwide lockdown.

He said all auto manufacturers incurred huge losses and there was a month (April) when not a single vehicle was produced by all three OEMs.

"However, not a single employee was laid off and we even provided interest-free loans to our vendors to be committed to our core value of promoting the local engineering base in Pakistan," he added.

He said the momentum started picking up since July and due to overwhelming demand, the company went for double-shift production, which would help meet demand and reduce delivery lead time.

The IMC has been striving to meet the expectations of its customers and one of them is the offering earliest delivery to them.

"We are happy that double-shift production will fulfill our commitment to our clients," he maintained.

M/s Toyota's production was well in pace at the start of this calendar year as total production was over 4,000 units in the month of January with a Month-on-Month increase of around 90 percent.

However, owing to the government-directed lockdown on account of the COVID-19, production came to a virtual halt until May 19, when the lockdown eased and ramp up began.

Things got far better in Sep with the production of over 4,300 units.

He added that despite such a crisis the company, did not compromise on its quality production, and its commitment to enhance the engineering base of Pakistan.

"The company contributes one percent to the national exchequer through trading parts (by procuring local parts worth over Rs200 million every working day), while it employs around 3,000 people to cater to second highest market share by dint of 75,000 units of annual production capacity," said Jamali.

"And this all is being done in spite of various challenges to the industry including rupee devaluation, imposition of Federal Excise Duty, and Additional Custom Duty," said Jamali.

He said their request to the government was to support the biggest manufacturing sector of country which employs three million direct and indirect labour and promote "Make in Pakistan" policy by encouraging industrialisation.

"Auto sector foresees a promising future and to be the biggest contributor to the government's macroeconomic goals, provided a predictable and long-term auto policy is in place," said.

Copyright Business Recorder, 2020