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The new automotive policy of government seems to be a complete disappointment for the new foreign manufacturers like Volkswagen or Audi as they cannot mark their entry in Pakistan.

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The monopoly of existing car assemblers and their nexus with bureaucrats has blocked the preferential incentives for new foreign manufacturers without which they cannot establish their assembling units in Pakistan. Government of Pakistan wants to bring foreign, especially European car manufacturers in the country to break this network, but they have been pushed to the back foot.

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The Ministry of Industries and Production on Monday tabled a revised automotive development policy for approval of the Economic Coordination Committee (ECC), and it was the second time in the last seven months that ECC could not reach to a final decision. The revised policy was offering the existing auto assemblers similar tax incentives that the government wanted to offer to new players.

Pakistan’s New Automotive Policy was not approved today due to the last minute intervention by Khawaja Muhammad Asif, Minister for Water and Power, who raised the point that approval of the policy should be deferred as Board of Investment Chairman Miftah Ismail was absent. ECC Chairman and Finance Minister Ishaq Dar then directed to carry out more consultations and deferred the approval of new policy.

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The matter is pending since October 2013; however, the delay in approval of this new automotive policy is beneficial for the existing assemblers. Even Federal Board of Revenue (FBR) is against the extending benefits to the existing manufacturers.

Volkswagen and Audi, Germany’s biggest and the world’s second largest automobile manufacturers in terms of market share, intended to do business in Pakistan, provided a competitive business environment is available.

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