Pakistani auto part manufacturers push for exemption from steel and aluminium import duties

The Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam) has urged the Federal Board of Revenue (FBR) to immediately withdraw the new regulatory duty on all raw materials that they import.

The government has recently imposed 15 per cent additional import duty on different steel products. However, this has caused problems for the auto industry that imports various steel raw materials under the common Pakistan Customs Tariff (PCT) codes.

The intention behind levying duties on steel and other metal imports including aluminium was to protect the local industry in the face of dumping by Chinese manufacturers that resulted in underutilisation of local plants. The association did appreciate the imposition of duty to protect the local metal industry, but asked the government to find out ways to deal with both industries separately.

Apart from raising the duty up to 35 per cent, the FBR on March 21 also introduced 10 per cent duty on aluminium alloy that the makers of cars, motorcycles, tractors, trucks and bus import to produce different parts.

Paapam published an appeal on Monday in a newspaper advertisement, saying that the duty would make locally produced auto parts uncompetitive compared to imported finished auto parts, on which duty was not applicable.

“The imposition of such abrupt import duties will also badly affect the confidence of investors who are preparing to invest after the announcement of new auto policy,” said an auto manufacturer in Karachi.

There are 375 auto part makers in Pakistan and about 1,600 tier two suppliers that supply parts to local auto assemblers and also export them.