KARACHI - The auto manufacturers has demanded the government to cut the rate of duty on the import of car assembling components from present 32.5 per cent to 20 per cent which will provide relief to the consumers in the form of decline in car prices. If the govt is serious about slashing the auto prices it has to come up with an initiative to cut the duty by 20 percent on locally produced parts imported components, said an auto industry representative. The representative on the behalf of PAMA urged the government not to tinker with the agreed Comprehensive Auto Policy to save the local industry instead of applying coercive tactics resulting in the virtual collapse of the industry. They said that changes in AIDP will pave way for either low quality brands which is indicative of directionless policies and ambivalent approaches of policy makers with regard to auto industry. It is pertinent to note her that the auto makers, with the purpose of passing on the impact of 100 bps increase in GST to the consumers, have increased the prices of cars of different engine variants and models sharply by Rs30,000 to Rs50,000 from July 01, 2010. The government should realize that the car prices in recent years have increased marginally when compared with the stresses faced by the industry in the form of weakened rupee and high duties, he said and added that the government revenues on the parts that are not produced in the country increased substantially because of more than 30 per cent decline in rupee value during past 30 months. They added that prices of raw materials had increased in double-digit. The car assemblers are of the view that simply reducing the duty on locally produced parts imported components will enhance the local parts producing industry. The auto makers also feel that in case of change in AIDP with regards to new entrants, a level playing field should be provided to the existing car makers to introduce cars in a new category to not only benefit the consumers but attracting investments as well. According to assemblers, the incentive of bringing new makes and types such as if sedan is being produced locally same maker should be offered relaxation in duties to bring its Pickup and Van models which will lure further investments even by the existing auto makers. They further said the present production capacity of cars had increased from 80,000 cars in 2001-02 to 250,000 units in 2010 whereas at present the industry was operating well below its capacity i.e. 50 percent. Meanwhile experts on auto sector said the growth momentum of the industry would be sustained if the policy makers take this daring decision. There would be no fall in the government revenues as the increased production would compensate the reduction in duty. The experts regretted government with its flawed policies is trying to corner a vibrant auto industry which is not only surviving in the least encouraging business environment but also generating employment and substantial revenue. The assemblers expect that the Economic Coordination Committee (ECC) in its upcoming meeting to be held next week would not be taking any decision against the auto industry and the consumers. It may be mentioned here that, a special cabinet committee formed by Prime Minster Gillani to tackle industry issues, has recommended the ECC to allow import of used cars up to three or five years old, permitting more auto entrants from Korea and China to install production plants in Pakistan, reduction of duties and imposing restriction on already installed units for reducing prices.