KARACHI - The local auto manufacturers have demanded the government to ensure complete restriction on the illegal imports of spare parts via Afghan Transit Trade and revision in custom duty structure to curb the financing of under invoiced automobile goods at import stage. In a budget paper prepared by Pakistan Automotive Manufacturer Association (PAMA) for the years 2010 and 2011, it recommended that the system of custom duty being operated at ATT for the import of auto parts and other used and furnished goods need to be reviewed in a view to facilitate the promotion of the local manufacturing industry and to restrain the outflow of precious foreign exchange to certain imports from the country. The PAMA proposed that the illegal trade of automobile spare parts can be toppled by fixing the trade price of the importable items required for Afghanistan and through proper filing of bill of entries at the time of clearances. According to a PAMA document, the treaty for facilitation of imports with Afghanistan like other landlocked countries, be reassessed by the trade policy makers. There should be a quantitative ceiling for imports requisite for Afghanistan. Moreover, negative list of the auto imports under ATT be maintained and strictly implemented. In addition, the industry urged the Cabinet to cut duty for parts which are not produced in Pakistan and to make sure post clearance audit of the auto spare items on import. Serious penalties need to be enforced in regards to under-invoiced auto parts. Also Pakistan Automobile Manufacturers Association (PAMA) and Pakistan Association of Parts and Accessories Manufacturers (PAAPAM) should be involved in the valuation process of low level declarations at customs for clearance of imported auto parts, PAMA said. A closer look at the PAMA document revealed that the industry is facing difficulties due to gross and group under-invoicing and misdeclarations of auto spares. No support/protection from the government to indigenous spares manufacturers is also aggravating the situation. It said that original Equipment Manufacturers (OEMs), the local vendors supplying the spares to OEMs, the Chinese two, three and four wheel assemblers and their vendors are being affected by the illegal trade of such parts. As per the document revelations, a subcommittee was formed by Engineering Development Board (EBD) to look into the issue. The subcommittee held meetings with the above stated stakeholders to provide much needed protection to them in this regard. Currently, this matter rests upon the Cabinet on Auto Industry Development Programme (AIDP) whose policies were supposed to be administered by sessions of the Auto Industry Development Programme (AIDP). The auto sector demands from these two bodies to create a mutual consensus between all the parties before carrying out any changes. Also there should be a firm rule that any changes made will be by the decision of the Cabinet. There is also some issued being arisen from the customs in reference to illegal trade of spare parts. The discrepancy is that the imported readymade auto parts are being considered to have a value less in Kg as compared to the raw materials value (in Kg). It is advised assessment criteria should be changed from Kg to quantity. It was proposed that a Research and Development (R&D) allowance, similar to textile and clothing, should be allotted for the auto sector as well. Moreover, policies regarding sales taxes, customs, and adjustment of tariffs etc should favour the local manufacturing industry. The PAMA further demanded that follow the Auto Industry Development Program (AIDP) in letter and spirit and bring no abrupt change in policies without dialogue with stakeholders Government should eliminate 'mandatory localization under AIDP and protect the local industry through proper fiscal and taxation policies. The PAMA also sought for downward revision in withholding tax slabs be done at registration stage and removal of Federal Excise Duty on Royalty and Technical Fee and Consultation with industry on Free Trade Agreements/Regional Trade Agreements. PAMA further proposed to reduce interest rates on Auto Financing to facilitate consumers and to increase the sales of the vehicles in the days to come. It may be mentioned her that over the years the local auto industry has moved away from using a high level of imported parts/components to a healthy level of localization i.e. part manufactured locally by the local vendor industry. There are over 400 APM (Auto Parts Manufacturers) Tier 1 units plus 1,600 other APM supplying to Tier 1 units. In some models the localized content exceeds well over 50%.