Tariff-based duty structure for auto sector proposed
ISLAMABAD (January 04 2006): The Engineering Development Board (EDB) has proposed to the government to replace deletion-linked customs duty structure to tariff-based customs duty structure for automobile sector of the country, Business Recorder learnt here on Tuesday.
Under the deletion programme, it is mandatory upon every vendor to manufacture a specific percentage of parts locally and they are bound to increase this percentage gradually to move towards maximum deletion level for the benefit and promotion of the local industry.
However, under the tariff-based system this obligation would be removed, but to protect the local industry high duty has been proposed on the import of those parts which are being made locally.
The proposal will be forwarded to the Central Board of Revenue (CBR) which will determine the tariff on different parts and forward it for the incorporation in the budget of the coming fiscal.
The EDB has also proposed low tariff on the parts, which are not being manufactured by the local industry to ensure their availability in the market.
Under the tariff-based system manufacturers would be free to import any particular parts by paying high duty.
The steps, sources said, have been suggested not just to comply with the WTO requirements, but also for protection and promotion of the local automobile industry.
To a question, they said switching on tariff-based system would not have any negative impact on the local automobile industry, adding that suggestions of high tariff on the import of locally manufactured parts was to protect the local vendors. "The proposal was prepared keeping in view the inputs of all major stakeholders, including assemblers, manufacturers, but could be further amended," they added.
The EDB has asked the government to replace the existing Deletion Programme (DP) with the Tariff-Based System (TBS), EDB Vice Chairman, Imtiaz Rastgar said, stressing the importance of moving towards knowledge-based growth instead of relying entirely on cotton-based growth. "It is important for us to develop engineering sector parallel to cotton sector to ensure sustainable growth in the country," he said.
Chinese Investment in the motorcycle sector, he said, has boosted the sector and enabled us to export a large number of motorbikes being manufactured in the country.
He said Honda Company has also expressed the desire to manufacture its motorbike in Pakistan and to export them from here. He, however, said the agriculture sector-related industry has not yet been focussed. It is hoped that the proposals would be forwarded to the CBR by March 2006 for fixation of tariff.
source business recorder