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Regulatory duty on steel, increased cost of production burdening auto industry.

KARACHI -- Increased input costs are putting immense pressure on the local auto industry, while Regulatory Duty (RD) on steel is playing a major role in the increased cost of production,' said former Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM) chairman AamirAllawala.

'It is a basic principle that RD is imposed on imported products and raw materials that are available indigenously. Pakistan is not producing auto grade and tensile steel, still RD is imposed on it,' he added.

He added that rupee depreciation has also played a key role in the increased cost of production as the dollar has appreciated around 7 rupees in the last one year.

'Government should ensure predictable and transparent policies as only transparent and predictable policies can motivate manufacturers to invest more, increase capacity and attract new entrants,' said Aamir.

He also added that recent retraction on the misuse of imported used cars policy will hurt the industry's sentiments and give a negative message to new entrants. 'One imported used car deprives the local vendor industry of Rs300,000 and last year only around 80,000 cars were imported causing a loss of around Rs24 billion,' said Aamir.

He added that auto industry is employing around 2.5 million direct and indirect labour and has a lot more untapped potential which is linked to predictable and transparent policy.

He added, 'The industry needs support from the government in terms of transparent and consistent policies to regain its lost status both at the utilisation and production front,' said Aamir.

Aamir said that for any country, auto industry serves a launch pad for economic growth. 'It can play a similar role in Pakistan, provided government ensures long-term predictable policies and environment,' he concluded.

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Publication:Pakistan Today (Lahore, Pakistan)
Geographic Code:9PAKI
Date:Feb 21, 2018
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