Islamabad mulling import of used auto parts

Pakistans Central Board of Revenue has asked the commerce ministry to amend the import policy and allow import of used auto parts to check $1 billion smuggling, official sources said here yesterday.
However, the sources say, the proposal faces tough resistance from importers and local vendors. The CBR had sent a summary to the commerce ministry, saying the step could also add Rs 5bn to revenue every year if the imports were legalized, sources in the auto industry said.

The commerce ministry has not yet come up with any response, said a source privy to the talks between the CBR and the commerce ministry. The ministry would definitely approach the local industry of auto parts and importers whether they support the import or not and it doesn�t appear possible.

He said the CBR proposal was based on data it had prepared to estimate the total worth of smuggled goods that made their way into the country through illegal channels and damaged the local industry in addition to depriving the exchequer of huge revenue.

The CBR estimates suggest that auto parts worth $1 billion are smuggled into the country every year, said the source. It is the second largest amount after cloth, which shares $3bn annually in the total amount of smuggled goods.

The smuggling trend in auto parts got encouraged after the government in June 2004 imposed a 35 per cent import duty on its trade, which was not more than 25 per cent and mainly varied from 15 to 25 per cent during 2003-04.

The CBR moved to curb smuggling through duty structures after it reported that 13 government agencies to check illegal trade through air, land and air routes had, reportedly, failed to bring down the smuggling.

Actually the CBR proposal targets only those used auto parts, which are not manufactured locally, said the source citing the CBR summary sent to the commerce ministry.

So it is logical that it will not have any negative impact on our local industry and bring price competitiveness in the auto parts� market across the country.

However, he claimed, the proposal was not likely to be supported by the ministry of industries and production as it would stand by with local vendors, who did not want this trade at any cost.

It may take time to get a nod from the higher authorities, because if the commerce ministry changed its import policy, it would have take all the ministries concerned into confidence first, he said.

Now in the local auto part markets, Chinese and Indian products have made their presence in bulk and dealers say the pace of neighbouring countries has almost surpassed Japanese products.

Dealers in the seven big auto spare parts� markets in the city with over 4,500 shops, see the scope for used auto parts business, but importers believe it would negatively affect the retail markets.

It would encourage illegal business mainly in retail market and would ultimately harm consumers, said Sheikh Arman, chairman of the Pakistan Automobile Spare Parts Importers and Dealers Association.

1 Comment so far

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