KARACHI, May 5: A leading auto assembler is lobbying ahead of the new budget for the permission to import Euro-II compliant auto parts from India at zero rated duty for manufacturing cars with Euro-II engine locally.

However, the local auto vendor industry has strongly opposed the assembler’s move in a meeting of the sub committee of the Auto Industry Development Committee (AIDC) held last week in Islamabad at the Engineering Development Board (EDB).

Sources in the auto sector said that Pak Suzuki Motor Company Limited (PSMCL) has floated this proposal because India’s Maruti Suzuki also produces the same model with Euro II engines.

Despite the fact that trade with India is not allowed in the auto sector, the local company is looking forward for the approval ahead of the next budget.

An official in the EDB, who asked not to be named, also said that the PSMCL had taken up this issue but the decision cannot be taken overnight.

The matter would again be discussed in the high-level meeting of the AIDC but it will not be an easy decision because it is a major shift from one technology to another.

He added that the local vendors had been strongly resisting this proposal.

Members of Pakistan Association of Automotive Parts and Accessories Manufacturers, on condition of anonymity, said that the Euro was an advance technology and environmental friendly but the models especially produced by Suzuki in Pakistan are decades old.

They said that a vending base had developed but it cannot be transformed abruptly without taking the local vendor industry into confidence.

They said that they would not tolerate the import of Indian auto parts. If the PSMCL is interested in bringing Indian parts they can procure it from other sources at the 35 per cent duty rate for completely knocked down kits (CKD) under the Tariff Based System (TBS).

Vendors said that the PSMCL knows that the Suzuki car prices would shoot up in case Euro-II parts are imported at 35 per cent duty, that’s why they are keen for import from India at zero rated duty because Japan does not produce Euro-II compliant parts.

They said Pakistan did not have the infrastructure like green fuel for Euro-II compliant cars. They added that the Japanese manufacturer should think of a joint venture between the local vendors and the Indian vendors in producing Euro-II engines and its parts rather than directly importing them from India. Vendors also said that other Japanese manufacturers had opposed the Pak Suzuki’s proposal.

Besides, assemblers of bikes and a local tractor manufacturer have also sought permission to import of Euro II compliant parts from different sources.

Meanwhile, a car spare parts maker said that the vendors of Honda were already perturbed after the launching of new Honda VTI last year in which most of the parts are imported.

“In the previous model I was supplying 15 auto parts but in the new model the company is taking only one part,” he said.