After the delay of 3 years government has issued the new auto policy for the period of 5 years after the approval from (ECC) Economic Coordination Committee.
AIDP-2 (Auto Industry Development Program-2) under the new auto policy will boost foreign investment, enhance competition to lower prices for the consumers and increase employment opportunities in the country due to the incentives offered to the new entrants in the market.Following is the list of all important points of auto policy and related benefits which it may bring in near future:
All the above benefits that new auto policy may bring depends on upon certain factors, and some limitations do also exists. Most important of which is the sustainability of policies.
It is now a necessity for us to compete in the auto industry as our neighboring country India has more than 80 car manufacturers, unlike Pakistan where Honda, Suzuki, and Toyota dominate the auto sector. On another note, same is the case in Iran where Iran Khodro, Pars Khodro, and Saipan have created an oligopoly.
Also it would be beneficial for closed car companies like Kia and Hyundai, and Nissan. The new policy will benefit small companies like FAW as well to be more competitive in the game.
The new auto policy will be a game changer for breaking these monopolies in Pakistan, and we have to compete also with import duties rate as both India and Iran are reducing their import duties. India charges just 10% import duty. Sustainability of policies is also a problem in every sector of Pakistan, as in history our government was unable to allow assembling of reconditioned vehicles in Pakistan due to the pressure and lobbying by the power automakers in Pakistan.
Now after offering incentives to the new entrants in the market, it would be interesting to see how the existing carmakers will play their cards. Their attitude will play a major role in the sustainability of the policy.
It is the need of the hour in the automobile industry to introduce new car assemblers in Pakistani market to boost competition and to break monopolies. There is a significant potential for new automobile companies in our local market, so now it’s time to manage it properly for the benefit of all stakeholders.