Bike industry has demanded to reduce in complete knocked down (CKD) rates from 15 to 10 per cent, while completely build unit (CBU) rates should also be reduced from 65 to 55 per cent. Besides, reduction in sub-assembly from 20 to 10 per cent and reduction on duty of components from 10 to 7.5 per cent, said on budget proposal.
According to market sources, the budget proposal have jointly prepared by bike manufacturers and vendors has sent to Engineering Development Board (EDB), which is likely to put forward these proposals to finance ministry. The assemblers and vendors of two and three wheelers in their budget proposal have urged the government to rationalise tariff in order to bring down the costs to provide relief to the consumers and also allow the import of machinery parts and molds at zero duty rates.
The assemblers have asked EDB to support their proposal enabling the industry to lower unit price of bikes made in Pakistan so that better margins could be achieved through exports as well. They also demanded that the components attracting lower rates of duty than CKD rate should be allowed at statutory rates.
While, the other budget proposals aimed at accelerate the growth, competitiveness and exploiting the export potential of the industry include: Pak II (Euro II) complaint parts for 2-3 wheeler sector should be zero rated as after implementation of Pak II (Euro II) the cost of vehicle has gone up.
Moreover, restoration of issuance of income tax exemption certificate at import stage to manufacturers; withholding tax on the proceeds of exported good at 01 per cent should be reduced to 0.5 per cent as recommended by the Engineering Development Board (EDB) in the National Engineering & Exports Development Strategy (Needs) report in 2010.
And to promote the business and attract the investment corporate tax rate should be brought down from 35 to 30 per cent, 25 to 20 per cent gradually, as entities that can prove that 90 per cent of their purchases are from registered suppliers get a 2 per cent lower corporate tax rate.
Their proposals further suggest that Section 8-B in the Sales Tax Act, 1990, should be abolished, while the role of Pakistan Automotive Manufacturers Association and & Paapam in determining fair value of auto-parts by Federal Board of Revenue should be institutionalised with active participation of Engineering Development Board.
In order to develop export markets the government has to support the industry through funding for developing distribution networks and establishment of brand name exercise. It is also proposed that the Research & Development facility should again be made available to the industry of two/three wheelers with proper cover under the scheme, as it will help the industry to remain competitive at least in those markets where they have established their brands.