The Senate Standing Committee on Industries and Production on Monday expressed serious concerns for not reducing car prices in line with tax concessions availed in budget 2021-22.

The committee noted that local car makers had availed tax relief in budget but did not reduce prices in line with incentives.

Industries and Production Division secretary briefed the committee, chaired by Senator Faisal Sabzwari, on comparing car prices in Pakistan with regional countries.

Committee members expressed concern over the high car prices in the country. The committee noted that despite the measures taken in the federal budget, the prices of new vehicles have not come down.

On this, the secretary said that the government measures in the new federal budget have brought down the prices of cars. The new auto policy emphasises on ensuring world quality of vehicles.

The secretary further told the committee that prices would have been higher if the government had not created a competitive environment.

He said that there are several reasons car prices in India are lower compared to Pakistan.

There is local raw material for cars in India. The secretary said that that the production of Suzuki in Pakistan is 100,000 whereas, the annual production of Maruti Suzuki in India is one million.

Taxes and duties on vehicles have been reduced, while duties on imported vehicles up to 1,000cc have also been slashed.

He said that vehicle prices have been reduced from Rs85,000 to Rs155,000. The official further shared in the briefing that Honda did not reduce the prices of BRVs.

The meeting agenda entailed detailed comparison of car prices and specifications in the region, and briefing on impact of government incentive on the automobile industry and on the end users and functions. The committee was also briefed on the functions, projects and future schemes of Small and Medium Enterprises Development Authority (Smeda).

While discussing the pricing of cars in Pakistan, the committee was informed that in the case of small cars higher level of localisation and volume are among major reasons for lower prices of cars in India.

On the other hand, cost of larger cars such as Toyota is lower than regional prices. It was asserted that government incentives resulted in reduction of prices of cars in the local market range of 50,000 to 400,000 and has been beneficial to the end consumer as well as the industry.

It is expected that lowering car prices will increase demand thereby creating opportunity for the automobile industry to increase capacity utilisation and opportunities for localisation of auto parts.

The committee chairman recommended that members of the committee must visit production units. Questions about standardisation of safety protocols in newly manufactured vehicles were also raised during the meeting.

Regarding the functions, projects and future schemes of Smeda, the committee was told that there are 33 projects in the current Public Sector Development Programme (PSDP).

Various measures are being taken to promote the growth of SME’s in the country. The committee was informed that the National SME Policy Action Plan 2020 has also been developed.

The Prime Minister’s Office constituted the National Coordination Committee (NCC) on SMEs development in August 2020. Accordingly regular review meetings of NCC were held under the chairmanship of the prime minister. The National SME Policy Action Plan 2020 was approved by the PM in the NCC’s meeting held on October 8, 2020. Priority areas included regulatory simplification of SMEs; simplified taxation regime and easy access to finance.

While inquiring about projects in erstwhile FATA, the committee was informed that the Economic Revitalisation Program, in collaboration with the World Bank, was specifically designed for the region. The members recommended that special attention must be paid on the development of the marble and gems and jewellery enterprises in Pakistan.

Published in The Express Tribune, August 3rd, 2021.

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