The up-stream automobile industry which is generally
called as a mother industry is essentially responsible for creating a
much larger vendor industry thus helping rapid development of the down
stream activity especially the engineering side of the economies around
The importance of the vendor industry, which is
responsible for producing auto parts reflected in the fact that even
after decades of rolling out a car in the market, the market demand for
spares of the same model remains intact which keeps moving the wheel of
the engineering industry.
The auto parts industry was expanding in Pakistan at
a growth rate of 10 to 20 percent per year.
On one hand Pakistan has joined the club of the
countries which are exporting spare parts, and on the other hand its
growth benefiting the neighboring countries which are enjoying the
market share in Pakistan.
No government department has any statistics on this
subject, however, according to roughly estimated figures by the dealers
and auto parts importers, the per capita requirement of parts comes to
100-150 per vehicle in Pakistan while the demand for some fragile parts
including accessories exceed the normal demand.
Since the demand for auto parts in India and Pakistan
are identical, Indian parts which are cheaper in terms of price, have
flooded the local market are feared to takeover the major market share
from Chinese competitors in not a distant future.
Dealers in spare parts markets feel that Indian
products are being imported through Dubai and sold in the local markets.
Import of auto parts from India was in practice for the three years,
however, the trend has been geared up during recent years.
Earlier, some four Indian products including lights,
seat covers, rubber pedals, levers had carved a place for themselves in
the local market. However, with the demand growth, about 24 different
products from India have sneaked into Pakistan markets following
improved bilateral relations between the two countries.
According to dealers' estimates, Rs 3-5 billion worth
of Indian spare parts are making their way each year into Pakistan
market. The made in India parts available in the local market ranges
from tire covers to door glasses which indicates how speedily the Indian
parts are occupying the local market. Though the trade of auto parts is
transpired through a third country i.e. Dubai but it is now an open
secret known to everyone both in the private as well on the public
Though various Indian auto-part manufacturers have
succeeded to enter into Pakistan market, yet products from existing
countries are much visible in the market but the growing demand for
spare parts is the real factor behind the existence of Indian products
in the market.
The tremendous growth in the auto sector has helped
developing some seven major auto-part markets in Karachi alone. These
market outlets are not directly involved in the import of auto parts
from Dubai, instead it's a business carried out by some major players
active between Pakistan and Dubai. Though the Indian products are not
superior in terms of quality, yet they are cheaper as compared to
Chinese and of other origins, the price factor helps Indians to capture
Due to economic factors people comprise on quality
when they are offered the cheaper products from India, despite the fact
that quality-wise, the Indian products come at fourth place after Japan,
Taiwan and China.
The Indian auto parts are available for all types of
vehicles besides the tractors' accessories, which are also in demand.
According to a market survey, the Japan-made door
glasses of Suzuki Alto car are available at Rs 1,400 while the Indian
glasses would cost only Rs 800. Similarly oil pump of Taiwan is being
sold at Rs 3,800 while the Indian brand costs merely Rs 1,600 for the
The vendor industry in Pakistan was not happy over
the situation as arrival of Indian auto parts have added to the
hardships of local industry already facing due to cheap Chinese
The only way to survive for the local vendors is to
get ready to compete with the onslaught of the imported products in
terms of quality, quantity and the price, if they have to survive in the
market in the face of free trade.
It is said that the onslaught of foreign parts
especially from India and China have hit over 1,800 production units in
Pakistan as they were earlier enjoying the monopoly and freedom to sell
their products at their own terms.
The vendors have asked the government to check such
trend and take measures to protect the local industry, said an office
bearer of auto parts dealers association in Karachi. "We have also
offered our technical assistance to design a policy". He said
vendors have share of Rs 45 to Rs 50 billion in auto industry and it
could badly hit by imports from China and India.
But traders disagree with vendors and question the
quality of locally produced auto parts. Though Indian products are not
matching quality standard of Japan and Taiwan, they are still far better
then locally manufactured spare parts. Indian products cannot damage the
industry, another dealer said, Currently a number of Indian products do
not cover all ranges but it may do in future as the trend is increasing
day by day.
He said currently lights, seats, external body parts,
tires and accessories of farm tractors are available, which he said is
wrong to say that it could hurt local industry. He said smuggling is
major cause of any negative impact on industry and local markets.
Vendors themselves asked the government to impose 35 percent import duty
on all kinds of spare parts in the budget 2004-05, he said. This has
resulted in rampant smuggling through Pakistan's porous borders and
through Afghan Transit Trade (ATT) facility.
The government in budget 2004-05 imposed 35 percent
import duty on spare parts, mainly varied from 15 percent to 25 percent