Auto Industry Development Committee (AIDC), which is scheduled to meet on Tuesday with Secretary Industries and Production/CEO EDB, Shafqat Naghmi in the chair, will approve inclusion of new assemblers in the auto sector and special relaxation to Indus Motors on import of parts for Fortuner.
Official sources told Business Recorder that the committee will approve mini vans/cargo vans/pick-ups of M/s Tayyaba Motors (Pvt.) Limited and M/s Ghandhara DF (Pvt.) Limited as new entrants. Mini vans/mini truck/ pick-up/ single cabin diesel engine, 2200 cc of M/s New Allied Motors (Pvt.) Limited will also be approved as new entrant. Introduction of new category of pick-up by M/s Master Motor Corporation (Pvt.) Limited and removal of parts from A-Max list in IMV-IV (SUV category) is also on the agenda.
Giving the details, sources said that AIDC granted provisional approval to M/s Tayyaba Motors (Pvt) Limited as new entrant and issued assembly certificate and list of importable components to the firm so as to facilitate them to import and clear the CKD Kits.
On August 20, 2013, AIDC had decided that M/s Tayyaba Motors shall revise the localisation plan spread over three years in accordance with the list of parts available under SRO 693(I)/2006 and re-submit to the EDB for placement before AIDC for approval.
The final approval shall be granted to M/s Tayyaba Motors in the next meeting subject to approval of localisation plan to be submitted by the company.
As per the decision of the committee, M/s Tayyaba Motors (Pvt) Limited was issued manufacturing certificate and list of importable components for the following models on provisional basis, as a new entrant. The list of importable components was uploaded on WeBOC to facilitate the clearance of consignments.
M/s Tayyaba Motors, as per AIDC decision, has provided revised localisation plan for the required products spread over three years in accordance with the list of components available under SRO 693(I)/2006 which is placed before the committee for approval. Commenting on issues related to M/s Ghandhara DF (Pvt) Ltd, Karachi the sources said, pursuant to the decision of AIDC, EDB technical team comprising of the following members visited the manufacturing facilities of M/s Ghandhara Nissan Limited on November 1, 2013, installed for the assembly/ manufacturing of vehicle under the firm agreement with M/s Ghandhara DF (Pvt) Limited: Engr. K. B. Ali, Dy. General Manager (Tariff)-EDB; Engr Roshan Lal, Deputy Manager-EDB (ROK); Engr Shaukat Ali, DGM-PMTF and Major Muhammad Nadeem, DAD-MVRDE.
After having detailed discussion with the Team of M/s GDFL and visiting assembly/ manufacturing facilities of M/s GNL, EDB technical team found the requisite facilities including Jigs, fixtures, machinery and equipment, satisfactory and functional.
Further, the firm has also submitted the revised localisation plan in accordance with the parts available under SRO 693(I)/2006 for the following vehicles. DFL 3180BY, Kingrun 210; 4 x 2 Rigid Truck, DFL 4250A8, Kinland 280; 6 x 4 Truck Tractor/ Prime Mover Captain C (C62-86); 4x 2, Rigid Truck.
The sources said, pursuant to AIDC decision of August 20, 2013, EDB served show cause notice to M/s Al-Haj FAW Motors asking them to justify/clarify their non-compliance with regard to localisation plan.
The firm was approached and served notice in respect of non-compliance of SRO for following products: FAW 220 HP, 4X2, Prime Mover, FAW 220 HP, 4X2, Cargo Truck g.v.w. 18 Ton, FAW 260 HP, 4X2, Prime Mover, FAW 260 HP, 6X4, Prime Mover FAW 260 HP, 6X4, Cargo Truck g.v.w. 30 Ton and FAW 330 HP, Prime Mover.
Accordingly, the firm has provided the following justification: (i) difficulties in providing confidence to the local vendors; (ii) difficulties in localisation due to extremely low volumes and market demand for products. The firm planned their localisation on the annual volumes of 1500 to 2000 units per year whereas only 117 units were imported during the first year due to sudden drop in the overall sales which eventually slowed down the overall process of localisation;(iii) despite drop in sales, the firm was forced to operate the plant at much below the break-even volumes and therefore suffered huge financial losses; (iv) delay in receiving the drawings and technical data due to lengthy procedures at FAW; and (v) due to very small volumes, vendors are reluctant to invest in new tooling. The EDB will also inform the committee that, M/s Al-Haj Faw Motors was also issued certificate for the assembly/manufacturing of their two new models ie. "FAW Carrier CA1024V (970cc), GVW less than 5 Tons" & "FAW Mini Van, CA6371 (970cc), 7 Seater" in July 2012 after approval of AIDC in its 12th meeting held on July 12, 2012.
However, the EDB has observed that after completion of the first year of commencement of business in respect of FWA Carrier & FAW Mini Van, M/s Al-Haj Faw Motors (Pvt) Ltd, also failed to comply with the conditions of the SROs/ new entrant policy. Certain parts, planned to be localised in the 1st year, have still been imported at concessionary rate of duty even after completion of one year, instead of developing them locally. Clarification provided by the firm with regard is as follows: (i) these products were planned to be launched in 2014 but the introduction and assembling of products had to be brought forward which eventually affected the localisation plan; (ii) due to the unavailability of technical drawings, some of the non-critical parts were developed. The firm, however, has revealed that they were pursuing hard with their principal to facilitate in providing drawings and level down of localisation parts; (iii) a team of FAW China, visited M/s Al-Haj Faw Motors to discuss the issues related to the localisation and as agreed between the two companies, FAW China will very soon provide the required data and samples which will enable the firm to localise the leftover parts of the last two years; and (iv) the firm has localised some value added parts which were planned for the subsequent years which shows positive approach of the organisation in putting its efforts in maximising the indigenisation. Meanwhile to facilitate the clearance of consignments, imported after June 30, 2013, the EDB provisionally re-validated the list and manufacturing certificate by recommending charging of additional duty on the import of parts planned to be localised in 1st year, in respect of all the vehicles. This was according to the conditions laid down in SRO 1098(I)/2011.
According to sources, as per the decision of the AIDC, M/s New Allied Motors (Pvt) Limited was approached to provide the requisite information. Accordingly, the firm has submitted and verified localisation plan for the following vehicle in line with the parts provided under SRO 693(I)/2006.
Subuk Raftar Shinery, Mini Van, 996cc- EDB argues that M/s New Allied Motors, as per the provision given under SRO 656(I)/2006 for contract manufacturing, have also made necessary arrangement to produce the vehicles at M/s Adam Motors, Karachi. As informed by the firm necessary Jigs & fixtures have also been imported by M/s New Allied Motors and installed at M/s Adam Motors, there with the intent to cater to the demand of southern region whereas, for their Lahore plant the Jigs and fixtures, etc are still to be installed. The sources further stated that M/s Master Motor Corporation (Pvt) Limited has approached the EDB for introduction of new tariff lines for the category of pick-ups. They also revealed that they are planning for introduction of new pick-up of the capacity of 998cc & 1298cc and new HS codes will help to get the benefit of localisation due to the introduction of new category of pick-ups.
M/s Indus Motor Company Limited has approached the EDB for removal of the following parts/ components used in the manufacture of IMV-IV (Fortuner) from the levy of additional customs duty applied due to availability of these parts under SRO 693(I)/2006 in the category of SUV.
M/s Indus Motor Company Limited has revealed that technology for the local production of these parts is not available in Pakistan or huge investment on the localisation of these parts is required. The parts are as follows: (i) exhaust pipe;(ii) parking brake lever;(iii) radiator grill (chrome);(iv) fuel filler pipe;(v) head lamps;(vi) wiper arms and blades and ;(vii) rear view mirrors (chrome).
EDB has recommended to the committee that M/s Indus Motor Company Limited was facilitated to allow assembly of SUV vehicle in petrol version, after the approval of AIDC in its 15th meeting held on December 24, 2012, on the basis of localisation level achieved in SUV (diesel version) and given under SRO 693(I)/2006 because at that time there was no HS Code for SUV in petrol category. The AIDC recommended to charge additional rate of duty ie 50% on parts of SUV (petrol) on the basis of parts covered in SRO 693(I)/2006 with reference to SUV (Diesel) and rest of the components at CKD rate of duty ie 32.5%.
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