ISLAMABAD Despite warning of the Prime Minister, the Economic Coordination Committee (ECC) of the Cabinet fails to break the monopoly of local car manufacturers, who have support of some powerful groups within the Government, by disallowing import of used cars. Available documents with TheNation revealed that Ministry of Industries and Production proposed to the ECC on July 1, 2010 to revise New Entrant Policy, besides reduction in tariff on import of new cars, increase in age limit of used cars from three to five years imported under personal baggage, transfer of residence and gift schemes or allowing commercial import of cars used up to three years by amending the import policy. Well-placed sources have informed that the car manufacturers are not utilising their full capacity on the pretext of less demand whereas they collect the car price about four to five months before the delivery. Consequently the depositors bear additional premium costs as well. Further, the Government has not been consistent on the policies about auto parts. Due to lack of interest on the implementation of deletion programme, the car manufacturers on one side are increasing the prices of cars on account of import of spare parts and on the other hand enjoying tariff concessions. However, it has been learnt that the ECC has approved removal of condition on the new entrant of having 500,000 units in production in countries other than Pakistan. In case of car, the new entrant will now produce 100,000 units annually, however the local manufacturers will produce 100,000 units annually for 3 years from the date of operation subject to the prescribed international standards. Moreover, there will be no other restriction on setting up new industries in automobile sector. But the ECC deferred decision on the proposals regarding reduction in tariff on import of new cars as well as commercial import of three years used cars. Documents further disclosed that the automobile manufacturers during meeting with the Minister of Industries and Production showed their reservation to lower the prices of cars under the present economic scenario. They were of the view that sale volumes of the industry decreased to eight percent in 2007-08 and further decreased to 47 percent in 2008-09. However, the industry had stated to recover to the extent of 36 percent in 2009-10 but still it is below the level of its peak year i.e. 2006-07, while Pak currency devalued by 11 percent against Japanese yen from April 2009 to April 2010 and 5 percent against US dollar. Moreover, the automobile manufacturers were of the opinion that present production capacity of cars had increased from 88,000 cars in 2001-02 to 250,000 units in 2010 whereas at present industry was operating well below its capacity i.e. 50 percent and prices of main raw materials had increased in double digit. Further, if tariff on imported parts was reduced from 32.5 percent to 20 percent, it will entail reduction of prices from Rs 25,000 to Rs 30,000 per unit. Moreover, it is pertinent to mention here that Prime Minister Syed Yousuf Raza Gilani, while chairing a meeting of the Economic Coordination Committee (ECC) of the Cabinet, had warned the local car manufacturers to lower the prices of cars for public interest otherwise the Government would allow the import of used cars.