Auto industry improves trade relations with India

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10Despite being a protected sector in Pakistan, the automobile industry argues about the abolition of the negative list and the tiny sensitive list in trade with India.

House of Habib Vice Chairman Automotive Sohail P Ahmed shared why the auto industry is in support of trade with India and why it wishes for the government to loosen restrictions gradually.

Ahmed expressed that the automobile industry has the tendency to improve by steadily increasing trade with India step by step. “Auto industry requests the government to chalk out a long-term plan that can increase manufacturing of automobiles and their parts in the country,” he stated.

As per the latest report by the Pakistan Business Council (PBC), the country’s automotive industry is protected under the negative and sensitive lists with numerous items overlapping in the two lists. In addition to this, the automobile sector would still be able to gain protection even after the eradication of the negative list (a list of 1209 items in which Pakistan does not allow trade with India).

On light of the latest Pakistani automobile news report by PBC, it is quite evident that India is a cheaper alternative for automobile spare parts, as compared to Pakistan’s current source of import like Thailand and Japan.

The government of Pakistan is considering the issuance of a Non Discriminatory Market Access (NDMA) that will abolish the negative list. In return, India is willing to eradicate all non-tariff barriers (NTBs) that seem to hinder Pakistani exports.

India does not keep any negative list for Pakistan, but because it has strict tariff and para-tariff protections for its local industry, Pakistani exporters face difficulties in exporting to India.

Ahmed remarked, “Pakistan can bring down the sensitive list to 350-400 items from the current 936 items but not to 100 items as it will badly hurt its auto industry,”

He further added, “But one thing is clear, if you want to promote manufacturing in the country then you must protect your local industry.”  With regard to India, Malaysia and Thailand, he said that automobile producing countries protect their auto industries because this industry generates countless employment opportunities in auto part manufacturing.

Ahmed said that compared to automakers, auto parts makers have higher chances of success if Pakistan starts importing auto parts from India.

He has complete faith in this decision, “I am in all favour of joint ventures and technology transfer with Indian auto companies. If that happens, it will converge the interests of Indian and Pakistani auto industries bringing down cost of production and also create more job opportunities,” he said.


 

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