The Pakistan Automotive Manufacturers Association (PAMA) has urged the Pakistan government to put automobiles and auto parts in the negative list of the Free Trade Agreement (FTA) with Sri Lanka to safeguard Pakistani manufacturers against the entry of cheaper Indian products manufactured in Lanka.

According to the Pakistani daily Express Tribune,  PAMA Director General Abdul Waheed has written to the Industries Ministry saying that Lanka is setting up automobile manufacturing plants in collaboration with Indian companies and that plans are afoot to use Lanka’s FTA with Pakistan to export these products to Pakistan.

“This will undermine Pakistan’s thriving vending industry. We are already facing a hostile tariff regime where the local vending industry is importing castings and forgings at 20 per cent duty. If finished products like gears are allowed to be imported at 5 per cent or less duty from Sri Lanka, the local industry will suffer massive hemorrhage”.

“Parts like ignition coils, CD units and parts and accessories for motorcycles including mopeds, are attracting a basic customs duty of 35 per cent and an additional duty of 15 per cent. These parts, if imported from Sri Lanka, will come at 5 per cent duty or less”.

“We will be giving away our market to Indian products routed through Sri Lanka at the cost and peril of a domestic value adding industry”, Waheed said.

Confirming a recent push to set up auto manufacturing plants in Humbatota district in South Lanka, Azmi Thassim, President of the Humbantota Chamber of Commerce told Express on Sunday that David Pieris Motor Company (DPMC) has set up a plant to make two and three wheelers in collaboration with Bajaj Motors of India; and Micro Car Company (MCC) has entered into a deal with Sino Motor Industries to make buses. MCC is already assembling SUVs and cars of the Mahindra-owned South Korean company, Ssangyong.

At the moment, these plants assemble parts imported from parent companies in India,China and South Korea for local consumption. But at a later date, they could manufacture for export using FTAs, trade sources said.