Pak-India trade talks: Automotive sector urges cautious approach
KARACHI: Participation of automotive sector in the India-Pakistan trade talks is necessary for achieving positive results towards enhancing commerce, and ensuring maximum protection to local industries.
This was stated by Arshad Awan, CEO of General Engineering, Karachi and member of Pakistan Automotive Manufacturers Association (PAMA). He told Business Recorder here on Monday that "cautious approach and strategic planning is needed to safeguard the country's engineering base."
Involvement of private sector in policy making should be enhanced properly to ensure guaranteed prosperity of the two neighbouring countries through bilateral trade ties. Instead, however, the government at ministerial and secretarial level takes unilateral actions which results in loss making deals causing destruction of its own industries, he said. Delegations, mostly formed by the bureaucracy, consist of traders, and not industrialists, which usually results in directionless talks, without safeguarding local industry's interests, he added.
Awan said that free market economy is a rhetoric, which has not been implemented by India even after giving MFN status to Pakistan in 1995.
The non-tariff barriers are a blatant rejection of the same, so strategically implemented by India that even Pakistan government and its functionaries are unable to understand the viewpoint of industry and are vehemently pursuing to announce MFN status for India just to appease the Western countries, which only want to invest in India, and use Pakistan only as a market. The Asian countries, like China and Japan, on the other hand, would like to invest in Pakistan as long as there is consistency in policy and not the dominating views of traders in every matter, he said.
"At present, private sector is invited to some of the policy making forums but their involvement is largely limited to a few photo sessions that are subsequently used to satisfy international donor agencies," Awan, a leading automotive part maker, said, and added that "almost all serious and important decisions, affecting business and industry, are being taken by politicians and bureaucracy."
He said that automobile industries of the two countries are rivals of each other, particularly in the motorcycle sector, in exporting countries. Therefore, India and Pakistan are not allowed to compete in the auto sector, particularly through their bilateral trade.
Pakistan is one of the few countries in the world, which manufactures all types of vehicles with higher production capacities than the current domestic demand for the same. The country annually needs 192,000 cars, 16,000 trucks and buses, 700,000 tractors and 1.5 million motorcycles.
Pakistan government should not allow import of Indian brands because Indian government would not allow Pakistan-made vehicles owing to non-tariff barriers. Emission standards Bharat 1 and Bharat 2 etc are so unique in their application that no Pakistani vehicle will qualify to be sold in the Indian market. The taxation measures, although on face of it is not Pakistan-specific, hit Pak products, particularly. Further, the testing requirements have such timeframes and costs attached to them that place small exporters at a huge competitive disadvantage and particularly bar their entry to the Indian market.
Trade in automobile sector in general and in different sectors in particular should be opened gradually with progressive pace keeping in mind that the two states strengthen the economies of two nations, stakeholders say.
Awan explained that trade should move both ways, and Indian markets should be accessible to Pakistani products as Pakistan's products would be to them. "Let Pakistan's auto sector have import opportunities of raw materials and tooling from India, and let our vendor industry have opportunity to export castings and rubber parts to them. Then, let us see how receptive the Indian market is to our overtures," he said.
He urged that Pakistan should study how India responds, on the ground, and not just on paper. Trade agreements, such as WTO and the bilateral agreements such as FTA and Safta, should be framed in professional way, and great importance should be given to national interests, its industries and economy, he added.
Arbitrary and short-term approach to such issues will have a deep and long-lasting impact on the economy. Important issues, like trade with India, are being decided by politicians and debated by people who have no stake in the industry and no expertise in its working, he said.