Automotive Policy of Pakistan that was officially introduced back in 2016 among the media. However, this article will hang around the idea of a careful analysis of this policy to draw attention to who is getting benefit by the policy and whose’ not.
The new automobile policy offers tax incentives to new applicants in order to facilitate them to create developed units in Pakistan and successfully competing with the existing three auto-assemblers, who are in service since the early 90s.
The policy benefits the three main stakeholders (government, new car makers, and the consumers) in the subsequent ways:
Government
- Emphasizing the improved policy making for public and economy’s welfare.
- Enhance welfare of the consumers by providing safer and finer cars.
- Producing higher revenue (Increased production means higher income for the government in the form of income and sales tax.)
- Stable auto industry environment as its long term policy.
- Enhancing inflow of foreign investment and market competition by the entrance of new players.
- It present a vision for the auto industry.
Benefits for new car makers!
- Facilitate new players to put up their assembling and manufacturing units. As the policy permit duty-free imports of plant and machinery.
- The new entrant would be able to introduce 100 vehicles at 50% off on import duty for market testing.
- Decline of 50% import duty on localized parts for five years.
Benefits for consumers!
- Competitive prices and value for money.
- New and enhanced models on regular intervals.
- Quick delivery of new cars.
- Cheaper spare parts and their ease of access.
- Benefiting lower income groups by the introduction of car finance schemes and manufacturing of 800cc or lower vehicles (small cars).
- Motorbike riders can switch to small cars, as the price gap would be reduced.
A chief incentive for the new investors has reduced 10% customs duty on non-localized parts for five years against the 32.5%. For localized parts, it has been reduced to 25%.
The new auto policy makes a very promising vision for all the stakeholders while becoming conscious and present more profit to keep the consumers best interest at heart. Furthermore, this new Automotive Policy is anticipated to convey international auto-manufacturers in Pakistan, which not only amplify the boost country’s economy but will also enhance the demand for technical labor, therefore kicking off a cycle of development. It is significant to highlight that this policy also offers duty motivations to new participants to allow them to build up assembling units in Pakistan.
