SIFC advises review, extension of import quotas for auto manufacturers

ISLAMABAD: The Special Investment Facilitation Council (SIFC) has advised the Ministry of Industries and Production to review and extend and “Revalidate the Imports quota” for auto manufacturers, comprising three Japanese automotive brands and eight new market entrants, for a maximum duration of 90 days. 

Nevertheless, the council has instructed the ministry to collaborate with these manufacturers during this period to ensure their compliance with localization and export obligations, a top official in the Ministry of Industries involved in the process told The News.

The official said, “In a couple of days, we will get the official notification and the revalidation will be made.”

The official, however, strictly negated the notion that Pakistan had suspended the licenses of three companies. He said that it was the issue of revalidation of the import quota, and this issue was with all the 11 companies, including these three.

“We did not suspend the licenses of any company; however, their import validation quota expired on Sept 30, 2023, and has not been revalidated. The major issues were non-localization and no exports of a certain portion of their products required under Pakistan’s auto policy 2021-26.”

Another official of the Engineering Development Board (EDB) also confirmed that licenses had not been suspended. However, since these companies could not meet the required targets, their import quotas ceased to be validated. However, after the SIFC instructions, it is hoped to be restored in the next few days.

It may be noted that the Executive Committee for Special Investment Facilitation Council (SIFC) held its 6th meeting on 23-24 October 2023. The committee met to review the progress of various policy-level initiatives and projects in key sectors, including industries.

In 2021, the government launched the new auto policy 2021-2026 that outlines regulations and incentives that are applicable during this period. However, it also asked for localization and exports of their products. Under the policy, in 2022, the required exports were zero, and in 2023, the target was 2 percent which these companies failed to meet. In 2024, the target is 4 percent, in 2025 it is 7 percent and in the final year (2026) of the policy, the target of their exports is 10 percent of their production.

The ministry also does the by-annual updation of the SRO-693(I)2006 where non-localized parts or components of a certain vehicle are added to localized categories, provided the companies start producing within the country. After that, a higher rate of duty will be applicable on them, if imported, to promote localisation. The official said now the government has taken a serious note of these shortcomings. It has directed the ministry to take strict actions against these companies. They may face penalties.

To mitigate the challenges posed by ON-Money and late delivery, a penalty was instituted for delays exceeding two months, set at KIBOR+2 percent under the ADP 2016-21 framework. Subsequently, this penalty has been augmented to KIBOR+3% in accordance with AIDEP 2021-26. Furthermore, the enforcement of this regulation has been reaffirmed through the relevant SRO 837, dated June 30, 2021.