Auto part vendors want 51% increase in quota for import of CKD parts

Auto part vendors have urged the State Bank of Pakistan (SBP) to increase what they call a foreign exchange quota by 51% to $13 million from the current $8.59 million to avoid supply-chain disruption in the industry and streamline matters in line with the government’s policy.

In a joint letter written to the SBP governor, federal secretary for industries and production and CEO of the Engineering Development Board (EDB), the Pakistan Automotive Manufacturers Association (PAMA) and Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) requested removal of anomalies from the auto sector.

PAMA concerned at new mechanism introduced by SBP

They said that in July 2022, the government fixed an import quota of original equipment manufacturers (OEMs), specialising in cars and the SUV segment, at 50% of the average of the last four months. They also highlighted that this condition came into effect in September 2022 and it has severely affected the supply chain of the industry.

“Information is not widely available to automotive vendors and their consignments are stuck at port which is hindering the production of vehicles at OEMs’ (car manufacturers’) end.”

In the letter, the two associations stressed smooth clearance of import consignments from July 2022 onward.

Meanwhile, the OEMs specialising in motorcycle, tractor, truck and bus parts are allowed to import merchandise without any restrictions because CKD imports in these segments are quite low and amount to around one-fifth of car and SUV segments. The relaxation is given to them to fulfill the demand of the agricultural and public transport sector.

“We therefore request an additional quota of $2 million for this (car and SUV) essential segment of the auto sector,” the letter said.

Auto parts industry facing ‘historic crisis’: PAAPAM

Since the industry is bracing for introduction of new car models, OEMs and vendors are required to import machinery, molds, tools and fixtures, they said.

“For smooth development of local parts, the trial runs are conducted months before the start of mass production. We request enhancement of quota for import of machinery and allied equipment,” they requested.

“We urge SBP and EDB/MOIP to intervene and allocate a minimum quota of $13 million per month for bare minimum working of all segments of the automobile sector,” they said.

The two associations have also requested the government to establish a working-level committee under the chairmanship of the SBP governor and members from all related stakeholders to decide on foreign exchange allocation to the automotive vendors.