ISLAMABAD: The local auto industry has submitted a charter of demands to the government regarding the New Energy Vehicles (NEVs) Policy. Key demands include a complete ban on the import of used cars, the inclusion of renewable energy vehicles in the policy, and incentives for NEVs for a limited period.
Newzshewz has learnt that in a letter to the Engineering Development Board, PAMA’s Director General, Abdul Waheed Khan, expressed concerns regarding the NEV policy, which was recently discussed and reviewed by the association. According to Khan, PAMA members are apprehensive that the policy could allow the unrestricted import of Completely Built Units (CBUs) at significantly lower rates of duty and sales tax. This could deprive existing Original Equipment Manufacturers (OEMs) of a substantial market share, negatively impacting local parts manufacturers and stalling the growth of the domestic auto industry.
Allowing CBU imports at lower duty (25%) and sales tax (10%) rates would hinder current investments and deter future investments in the auto sector. This, Khan warned, would also undermine the objectives of successive auto policies that the government has been working towards since 2008. The current policy, AIDEP 2021-26, ensures a balanced tariff structure across various types of vehicles, including ICE, HEV/PHEV, and EVs. Therefore, PAMA suggests amending the existing policy to accommodate the proposed NEV promotion while ensuring consistency and maintaining investor confidence.
However, if the NEV policy is to be pursued, the government must consider its potential negative impacts. PAMA has recommended that the government thoroughly assess the policy’s effects and revise the rules accordingly.
PAMA further pointed out that the import of used cars already takes away almost 30% of the market share each year. It would be unacceptable for the NEV policy to allow CBU imports to capture an additional significant market share. Such a scenario could devastate the local auto industry.
To address this, PAMA proposes that the import of used cars be completely banned, with the exception of allowing overseas Pakistanis to purchase locally produced vehicles. Additionally, the NEV policy should be limited to the import of Electric and Fuel Cell Vehicles only. The existing tax structure for A Max parts under SRO 693 should not be charged at 1% CD, even for EV vehicles. PHEVs and HEVs should remain under the AIDEP 2021-26, as both types of vehicles function similarly, with the only difference being the external charging socket.
The NEV policy document does not specify any requirement for importers or investors to make subsequent investments in localization. Without such a commitment, the policy could lead to short-term profiteering instead of fostering genuine manufacturing capabilities in the country.
PAMA also recommends adding Renewable Energy Vehicles, such as biogas-powered vehicles, to the NEV definition. Other proposals include:
CBU imports should be limited to companies with minimum local manufacturing facilities, as per SRO 656, to avoid the creation of a junkyard industry without after-sales support.
The current policy for HEVs and PHEVs should continue until 2030. If additional incentives are granted to PHEVs, they should be extended to HEVs as well.
Duties and incentives for NEVs should align with those for other vehicles by at least the third year of the policy.
Only new models launched after the NEV policy announcement should be eligible for incentives. NEV incentives should be time-bound, ideally ending by 2030.
Imports of CBUs under the NEV policy should be subject to the existing regulations, such as WP 29, applicable to all locally produced vehicles.
PAMA hopes that the government will take a comprehensive view of the existing policies and laws before finalizing the NEV policy. The goal is to ensure that one of the highest revenue-generating industries in the country does not suffer irreparable damage and lose its growth momentum, which has already been negatively affected by various challenges in recent years.
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