Lahore, February 10, 2014 (PPI-OT): As the government is set to grant NDMA status to India on Feb 15, PAAPAM has once again reminded the authorities that Pakistan’s auto industry is not prepared for phasing out negative list, as our government has not carried out administrative and organizational changes in their internal systems for gearing up to the onslaught of Indian products.
PAAPAM chairman, Usman Malik, said that as the term MFN is not acceptable to the patriotic public of Pakistan, a more acceptable terminology of ‘Non Discriminatory Market Access’ has been created to cover up handing over of Pakistan’s market to the Indian industry, as Pakistan’s domestic industry is in a gross comparative disadvantage position in terms of energy as well as access to credit.
He said that the industry is stunned by the pace of developments and the lack of understanding shown by the PML N govt. He said that Khurram Dastagir failed in convincing many critical sectors how it was in national interest to give up Pakistani market to Indian goods without negotiating any reciprocal access for the Pakistani Industry. It is unfortunate that Pakistan’s trade diplomacy team failed at such a crucial juncture, he added.
The MFN or NDMA status to India will be disastrous on many accounts, as it will completely root out the heavy investments and technology transfers achieved in the past 60 years in the auto sector and destroy the employment base of 2 million people in this industry, to pave the way for foreign automobile companies operating in the country to shift their plants to India and make the country fully dependent on India, with whom we have hostile relations, as apparent from recent reports.
Usman Malik said that the dynamics and economies of scale in both the countries are quite different. India manufactures around two million vehicles a year while Pakistan produces just 150,000 vehicles a year. Further, the law and order situation and the scarcity of utilities means there can’t be a level playing field for the two.
He suggested the government to allow import of raw material, inputs, machine tools, machinery and equipment and other set of products categorized under industrial inputs through land route.
Usman Malik said that end of negative list is not fair before providing level playing field to the Pakistani manufacturers who are hit by prolonged electricity shutdowns, gas interruptions and skyrocketing energy tariffs.
“Several industrial zones in India offer concessions and hidden subsidies to promote the industry while in Pakistan there are frequent and prolonged energy outages, and the production capacities remain un-utilized across the board increasing the production costs for the majority of those SMEs who do not have resources to set up captive plants” he added.
“Although Industry wants to proceed with a favourable note on trade with India the way the government wants to put everything in fifth gear is unjustified, unfair and a complete nonsense. How can our government do this to us when they don’t themselves understand the implications of Injury and how to readdress it.”
The auto sector sees some business potential in the OEM sector but even this advantage cannot be accessed without ensuring a two way trade pact, he said.
“It is our strong demand that the Auto sector must remain in the protective lists until the industry itself feels it can move forward. We also urge the government strongly to use Wagha importable list with extreme care.”
Aslam Rayaz, senior vice chairman, PAAPAM, believed that government should negotiate a long-term phase out plan in the interest of the local industry, the government should not take short cuts and the trade between both the countries should be of mutual benefits.
Any hasty step, without obtaining a fair market access for Pakistani goods will result in disproportionate low growth of Pakistani industry. He said that Pakistan should build up capacity in customs, valuation, anti dumping laws, PSQCA, and the National Tariff Commission (NTC).
It should acquire technology and technical knowhow in creating and improving national testing and product standards that would put Pakistan on equal footing with India, Aslam Rayaz added.
For more information, Contact:
Chairman
Syed Nabeel Hashmi
Pakistan Association of Automotive Parts and Accessories Manufacturers (PAAPAM)
16-B, Westwood Colony, Thokar Niaz Baig, Lahore.
Tel # +92 42 37498474-5
Fax #+92 42 37498476
Cell: +92 333 4372500
E-mail: paapam@brain.net.pk; chairman@paapam.com