By Ayesha Mudassar

 ISLAMABAD, Aug 05 (INP-WealthPK): Pakistani rupee’s persistent decline in value against the US dollar has adversely affected the automobile industry, plunging its production.

Talking to WealthPK, Eng Asim Ayaz, secretary Auto Industry Development Committee (AIDC), said that the sector was experiencing the worst crisis as a result of rapid rupee depreciation, higher interest rate, skyrocketing material and freight costs.

The country's import bill is increasing at an exponential rate and the gap between imports and exports has widened to an alarming level as automobile imports account for a significant portion of the import bill, he pointed out.

Pakistan’s import bill for completely and semi-knocked down (CKD/SKD) kits for vehicles imported by local assemblers climbed by 54.08% in the fiscal year 2021-22.

According to the data released by the Pakistan Bureau of Statistics, the country imported CKD/SKD worth $2.438 billion in FY22 compared to $1.582 billion in FY21.

Mohammad Ayub, who runs an auto parts manufacturing unit, said that country's precious foreign exchange is being consumed on imports due to non-localisation. Many assemblers are not taking parts from the local vendors in some of their newly-launched models.

The auto industry largely depends on steel and plastic, which are primarily imported, he said, adding if Pakistan manufactured its auto-grade steel and plastic materials, auto imports would decrease.

The automobile sector is one of Pakistan's fastest-growing industries, employing over 3.5 million people and accounting for 3% of the country's GDP. It contributes around Rs50 billion to the national exchequer each year.

The import bill for CKD/SKD was $660 million in FY17, $809 million in FY18, and $818 million in FY19. The fiscal year 2019-20 was a difficult year for the entire country as industrial units were closed due to the Covid-19 pandemic. As a result, the CKD/SKD import bill for FY20 was only $478 million.

Efforts should be made to promote foreign investment in the industry as it can increase employment opportunities, generate foreign exchange earnings and save on imports through import substitution.

Credits:Independent News Pakistan—Wealthpk